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LONDON (Alliance News) - London stock prices ended higher on Friday, ending the week marginally up, with the FTSE 100 index supported by strong gains in banks and a soft pound, after the currency was hit by poor UK private sector data and better-than-expected US nonfarm payrolls.
"Markets around the globe focus on the positives in yet another good US jobs report," said IG analyst Chris Beauchamp. "It seems investors are happy to concentrate on the jobs beat, even if it leaves the broader economic landscape and the outlook for the next rate hike broadly unchanged".
The blue-chip index finished up 0.7%, or 47.55 points, at 7,188.30. For the week as a whole, the index ended up 0.1%.
The FTSE 250 rose 0.8%, or 152.51 points, to 18,411.67. The mid-cap index ended up 1.2% for the week. Meanwhile, the AIM All-Share ended 0.4% higher, or 3.55 points, at 893.63, rising 1.4% over the entire week.
The BATS UK 100 index rose 0.8% at 12,167.19, the BATS 250 ended up 1.0% at 16,741.63, but the BATS Small Companies fell 0.1% to 10,853.55.
The pound fell in the morning against other major currencies after data from IHS Markit and the Chartered Institute of Procurement & Supply showed that the UK service sector growth eased more-than-expected in January.
IHS Markit said the UK services PMI dropped to 54.5 from 56.2 in December, amid the slower output, with economists having forecast a score of 55.8. A reading above 50 suggests expansion in the sector.
Sterling stood at USD1.2539 at the London equities close on Thursday, and remained lower against the dollar to reach USD1.2527 prior to the UK PMI data release early Friday morning.
Following the UK PMI data, the US Bureau of Labor Statistics said hiring in the US increased more than expected, resulting in a further drop in the pound to trade at USD1.2498 at the London close on Friday.
The BLS's survey of employers showed that US nonfarm payrolls expanded by 227,000 jobs, above the 157,000 rise seen in December and economists' estimates of a 175,000 increase.
The bureau's separate survey of households set the unemployment rate at 4.8%, an uptick of 0.1% from December but still near the nine-year low of 4.6% in November.
However, US average hourly earnings grew by 0.1% month-on-month in January, but the increase was below economists expectations of an unchanged 0.2% rise from December. On a yearly basis, average hourly earnings rose 2.5%, below the 2.9% increase seen a year ago.
Also released in the London afternoon, the Institute for Supply Management said its non-manufacturing index for the US edged down to 56.5 in January from a revised 56.6 in December. Economists had expected the index to dip to 57.0 from the 57.2 originally reported in December.
Stocks in New York were higher at the London close, with the Dow 30 up 0.8%, the S&P 500 up 0.6% and the Nasdaq Composite up 0.3%. Still in the US economic calendar is the Baker Hughes US oil rig count at 1800 GMT.
There were also Markit services PMI readings for France, Germany, and the eurozone as a whole, showing that the region has made a strong start to 2017.
The eurozone services PMI in January remained unchanged from December at 53.7, slightly above the flash score of 53.6. Meanwhile, the composite index held steady at 54.4 from December, slightly above the earlier flash estimate of 54.3.
The French services PMI climbed to 54.1 in January from 52.9 in December, above the flash 53.9. The composite output index rose to 54.1 in January from 53.1 in December. The flash score was 53.8.
Germany's services PMI dropped to 53.4 in January from 54.3 in December, but the score was above the flash reading of 53.2. The composite reading fell to 54.8 in January from 55.2 in December, but was above the preliminary score of 54.7.
The French CAC 40 stock index ended up 0.7% and the German DAX 30 rose 0.2%. The euro was quoted at USD1.0780 at the London close compared to USD1.0800 at the same time on Thursday.
Gold stood at USD1,218.93 an ounce at the close on Friday compared to USD1,217.43 an ounce on Thursday. Meanwhile, Brent oil was standing at USD56.93 a barrel at the close compared to USD56.88 a barrel on Thursday.
Alongside the soft pound, banking stocks were another force driving the gains in the FTSE 100. Lenders benefited from increasing optimism about softer regulation on the US banking sector under President Donald Trump.
Trump's Treasury Secretary Steve Mnuchin, a former Goldman Sachs executive, has said stricter regulations imposed on the finance industry after the financial crisis through the Dodd-Frank Act should be revisited.
The FTSE 350 Banks sector rose 1.6%, with Barclays up 3.0%.
FTSE 100-listed ITV ended 2.1% higher. The broadcaster was upgraded to Buy from Hold by Investec. Investec said it remains cautious on ITV's long-term prospects, but believes the market is overly pessimistic about near-term prospects for the broadcaster.
A poor performance from mining stocks somewhat limited the gains in the FTSE 100, with the four biggest blue-chip decliners being miners, resulting in a 3.2% fall in the FTSE 350 Mining Sector index. The sector suffered from jitters, according to IG's Beauchamp, "as investors start to get worried about irrational exuberance among the big names".
"Investors have enjoyed remarkable capital growth, but now the sector is no longer on the verge of disaster, many would like to see the return of dividends," said the analyst.
In the FTSE 250, specialist insurer Beazley ended as the best performer, up 8.9%, the biggest mid-cap gainer, after saying it increased its pretax profit in 2016 following a year of strong growth in premiums written.
Halma also ended in the green, up 5.9%. The safety and environmental technology company was raised to Overweight from Equal Weight by Barclays. Halma's shares have fallen in recent months, leaving the valuation of the group looking attractive, the bank said.
In a thin UK corporate calendar on Monday, budget airline easyJet releases January traffic statistics, while gold miner Randgold Resources publishes full-year results.
In the economic calendar, German factory orders are at 0700 GMT, while the eurozone consumer confidence is at 0930 GMT. The US labor market conditions index is at 1500 GMT.
By Daniel Ruiz; danielruiz@alliancenews.com
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