UK Stocks closing : Better than expected U.S. jobs data lit up a subdued session for Britain’s FTSE 100, which eked out a small gain as investors shrugged off concerns over the health of Europe’s banking sector.
London’s blue chip index, closing higher for the third straight day, swung into positive territory after data showed U.S. employers hired more workers than expected in September and job gains for the prior months were revised higher, easing fears the world’s biggest economy was spiralling into recession.
There are timid signs that something is moving, Newedge Strategy’s Annalisa Piazza said.
Piazza cautioned that the unemployment rate was set to remain close to recent elevated levels for another few months as the economic recovery is not strong enough to give a substantial boost to job creation.
But bulls were not deterred, tucking into stocks with big U.S. exposure such as Wolseley .
The world’s biggest building supplies company climbed 4.1 percent, having been beaten down earlier in the week after the firm cautioned on its outlook in part due to its large exposure to the United States.
Miners, a barometer for the outlook of the global economy, was the best performing sector on the UK’s benchmark index as investors viewed the jobs data as a sign that demand could improve.
The FTSE 100 was up 12.14 points, or 0.2 percent, at 5,303.40, ending the week 3.6 percent higher after heavy losses on Monday and Tuesday triggered by doubts over the stability of the banking sector and the health of the global economy.
CONCERNS REMAIN
The robustness of Europe’s banking sector in the face of the ongoing debt crisis in the region remains a huge psychological stumbling block for investors.
With leading brokers further downgrading their global growth estimates as politicians attempt to tackle spiralling debts, it was the turn of credit rating agency Moody’s on Friday to pile more pressure on UK financials.
Moody’s cut its ratings on 12 lenders, including part state-owned banks Lloyds and Royal Bank of Scotland , and said it expected the UK government would have to continue to support key financial institutions.
Lloyds and RBS fell 3.4 percent and 3 percent respectively, while insurers such RSA and Legal and General shed up to 1.7 percent.
Meanwhile, investors were still looking for a cohesive strategy from politicians in the European Union as Germany and France remained split ahead of crucial talks on Sunday over how to strengthen shaky European banks and fight financial market contagion to prepare for a possible Greek default.
Within Europe, sentiment remains close to the bottom, said Lothar Mentel, chief investment officer at Octopus Investments, which manages nearly $4 billion.
Even if the politicians can pull a magic rabbit out of the hat investors will need to get used to the aftermath, which will likely be at best a lengthy period of low growth, or at worst, a formidable recession.
The prospect of low growth prompted Jeffries to cut its target price on BSkyB , down 2.1 percent, to 700 pence from 750 pence.
The broker said a number of risks relating to the consumer slowdown, growing competition and pricing pressure, and perhaps an adverse regulatory decision prevented it from being more bullish on the stock.
AB Foods was down 0.7 percent as the food producer was knocked by a profit warning from its mid cap peer Premier Foods , the top FTSE 250 faller, down 42 percent.
Unilever also suffered, off 1.5 percent, with traders noting talk that peer Nestle could be lowering numbers ahead of third-quarter sales on Oct. 20.
And SAB Miller slid 1.1 percent as Citigroup poured cold water on talk that Anheuser Busch-InBev NV/SA was lining up an $80 billion acquisition of SAB.
Given UK takeover laws, the fact that SAB kept a dignified silence throughout the day means that it hasn’t received such an approach, Citigroup said in a note.