BP Share News (BP.)

LONDON (Alliance News) - UK equities were being supported by firm oil prices midday Friday, ahead of a US jobs report which could help determine whether the Federal Reserve raises US interest rates later this month.

The jobs report, which consists of nonfarm payrolls, the US unemployment rate, average earnings, and labour force participation will be released at 1330 BST. Consensus according to FXStreet expects the nonfarm payrolls figure to rise by 164,000 jobs in May, and the unemployment rate to drop to 4.9% from 5.0%.

Ana Thaker, market economist at PhillipCapital UK, said a strong nonfarm result would lend itself to a rate rise in the Fed's meeting this month or at least in July.

"The Fed have been sending a hawkish message to markets for months, with hike expectation priced in, however, recently we have seen a change in market positioning with some doubts looking to creep in following [Fed Chair Janet] Yellen’s measured message last week. She will speak again on Monday, but if payrolls are strong, we may see the bullish sentiment renewed," Thaker said.

Analysts at French bank Societe Generale expect the recently settled strike at mobile-phone giant Verizon to dent the payrolls number by around 35,000 workers, so forecast an increase of 140,000 jobs. Workers who don't receive pay while on strike are removed from the payroll numbers.

"Excluding the Verizon strike, payrolls probably rose by 175,000, a solid, if unspectacular, result," SocGen said.

The Fed will announce its next monetary policy decision on June 15.

The FTSE 100 index was up 1.0%, or 60.49 points, at 6,246.10. The FTSE 250 was up 0.4% at 17,146.98 and the AIM All-Share was up 0.6% at 744.26.

UK service sector growth strengthened by more than expected in May after slowing to a three-year low in April, survey data from Markit Economics showed.

The Markit/CIPS UK services Purchasing Managers' Index climbed to 53.5 from 52.3 in April. Economists had forecast a score of 52.5. Activity has remained above the expansion line of 50 every month since January 2013.

Stocks in Europe also were posting gains. The French CAC 40 index was up 0.5% and the German DAX 30 was up 0.6%.

Data from Markit showed the Eurozone services PMI improved to 53.3, a three-month high, from 53.1 in April, and ahead of economists' forecast to remain unchanged at 53.1. The final composite output index rose to 53.1 in May from 53.0 in April.

Meanwhile, data from Eurostat showed eurozone retail sales remained unchanged in April from March, when they declined by a revised 0.6%. Economists had expected a 0.4% rise for April. The decline for March was revised from the initial estimate of a 0.5% fall.

Futures indicated a largely flat open on Wall Street. The Dow Jones Industrial Average and S&P 500 were both indicated flat, while the Nasdaq 100 was pointed down 0.1%.

On the London Stock Exchange, FTSE 100 oil major BP was up 2.4% after it said it has agreed to settle one of many outstanding legal claims made against the company following the Deepwater Horizon oil spill in the Gulf of Mexico back in 2010 after agreeing to pay some of its investors USD175.0 million.

US Federal and District Courts certified a legal case back in May 2014 that was brought against the company by a group of investors that purchased BP's US-listed American Depositary Shares after the oil spill occurred.

Those investors felt the full-effects of the oil spill and the impact of the incident was not revealed by the company in a timely manner, causing them to make losses. The Financial Times reported the case was set to start next month and said the investors in question could have secured a settlement of up to USD2.50 billion.

BP, along with other oil stocks, also was being supported by firm oil prices. Brent crude climbed back above USD50 a barrel, trading at USD50.10, higher than the USD49.77 at the London equities close on Thursday.

The North Sea benchmark initially fell on Thursday after the Organization of the Petroleum Exporting Countries failed to agree on a supply limit but regained ground late in the day as the US Energy Information Administration said its crude inventories fell by 1.4 million barrels in the week ended May 27.

Royal Dutch Shell 'B' shares were up 1.6%, and Tullow Oil was one of the biggest gainer in the FTSE 250 up 3.4%.

ICAP, the interdealer broker and trading platform provider soon to be renamed NEX Group, said it has secured a contract to provide fixed income and foreign exchange electronic execution services in mainland China through the China Foreign Exchange Trade System, the country's official inter-bank market trading platform.

EBS BrokerTec, ICAP's electronic foreign exchange and fixed income platform business, will handle the contract, which will be worth USD65.0 million over three years.

Numis analyst Jonathan Goslin viewed the contract as a "favourable endorsement of ICAP's infrastructure and services" and should justify Numis's enterprise valuation of 13.3 times net operating profit after tax. ICAP traded up 2.9%.

Source BioScience could be subject to a GBP63.0 million takeover after two private investment management firms revealed they are considering making an offer for the business within the next month.

Continental Investment Partners and Harwood Capital have teamed up to consider making the offer for Source BioScience and have already confirmed any offer is likely to be at a premium to the London-listed company's current valuation.

The pair have until the start of next month to either make a firm offer for the business or walk away from the deal.

Although it is not certain, the pair have indicated they will offer 18.0 pence for each existing share in Source BioScience and confirmed that offer would not be any higher than that but could be lowered under certain circumstances. The stock traded up 14% at 17.00p midday Friday.

Aside from the US jobs report, still ahead in the economic calendar is the US trade balance at 1330 BST. US Markit services and composite PMI readings are at 1445 BST, while ISM non-manufacturing PMI and factory orders are at 1500 BST.

By Neil Thakrar; neilthakrar@alliancenews.com; @NeilThakrar1

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