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LONDON (Alliance News) - London's main equity indices ended the day higher Friday after a disappointing jobs report from the US buoyed stocks in both the US and Europe by damping expectations that the Fed would start reducing economic stimulus programmes sooner rather than later.
The US non-farm payroll report said 169,000 new jobs were created in August, falling short of expectations of 180,000. The report also showed a notable downward revision to the pace of job growth in July, with the revised data showing an addition of 104,000 jobs compared to the previously reported increase of 162,000 jobs.
The headline rate of unemployment provided the US job market with good news as rates fell slightly to 7.3% from 7.4% in July.
The figures were highly anticipated following a raft of strong economic data from countries including the US, UK, Japan, China and the euro zone. Markets had begun pricing in a quick end to the cheap money and liquidity the world's major central banks have been pumping into the economy since the financial crisis. They'd also been pricing in interest rate increases to come way ahead of predictions by some of the central banks.
However, the disappointing US job figures have been taken as a sign that the economic recovery is not yet secured.
Both the FTSE 100 and the FTSE 250 were boosted by the data, although the indexes gave up some of their gains when President Vladimir Putin, giving his speech at the end of the two-day G20 meeting in St Petersburg, said that Russia would assist Syria if military strikes are launched against it.
The FTSE 100 closed up 0.2% at 6,547.33, the FTSE 250 closed up 0.5% at 15,048.28 and the FTSE AIM All-share closed up 0.1% at 765.51 after hitting another high for 2013 at 767.4.
The blue chip index closed higher on the week for the first time in five weeks.
At the UK close, the S&P was up 0.4% at 1660.95, the Dow was up 0.3% at 14,978.41, and the Nasdaq was up 0.3% at 3,668.02.
UK data released Friday was also softer than of late. The Halifax house price index for August recorded a monthly increase in prices of 0.4%, a slowdown from the previous month's 0.9% rise and a miss on the 0.7% consensus forecast.
UK production numbers were also slightly weaker than expected. Industrial production for July was flat, against forecast growth of 0.1%, while manufacturing production increased by 0.2% against 0.3% forecast.
The pound, despite slipping below USD1.56 early in the day as a result of the weaker UK data, rose sharply after the US jobs data as the dollar slumped against all other major currencies, reaching USD1.5632 at the close of the UK equity markets.
At the sector level, airlines gained again, taking back more ground from a sell-off earlier in the week when Ryanair released a profit warning. EasyJet closed up 1.3%, at 1,251.55 pence, TUI Travel also closed up 0.3% at 336.475p, while International Consolidated Airlines closed up 0.6%, at 301.2.
Tullow Oil closed the day as the leading blue chip gainer, up 3.6% at 1,069.679, following the news that the Wisting Central exploration well offshore Norway, in which it has a 20% interest, had made the first ever oil discovery in the Hoop-Maud Basin in the Barents Sea.
Monday sees GDP data from Japan at 0050 BST and Chinese consumer price data at 0230 BST. President Obama will give an address on Syria to the American people Tuesday.
By James Kemp; jameskemp@alliancenews.com
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