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(Alliance News) - London's FTSE 100 made an impressive start to the new year, shrugging aside drab manufacturing data, lifted by rising oil majors, gold miners and retailers.
The FTSE 100 index ended up 87.07 points, 1.1%, at 8,260.09. The FTSE 250 rose 17.62 points, 0.1%, at 20,640.23. The AIM All-Share jumped 4.07 points, 0.6%, at 723.70.
The Cboe UK 100 closed up 1.1% at 827.66, the Cboe UK 250 fell 0.2% at 18,028.35, while the Cboe Small Companies advanced 0.3% to 15,967.18.
In Paris, the CAC 40 reversed early heavy losses to close 0.2% higher on Thursday, while the Dax in Frankfurt advanced 0.5%.
In New York, markets were higher. At the time of the London close, the Dow Jones Industrial Average was up 0.2%, the S&P 500 was 0.3% higher and the Nasdaq Composite was 0.4% to the good.
Figures showed the US labour market remains robust while manufacturing activity, although weak, ticked up from an earlier estimate.
The seasonally adjusted S&P Global US manufacturing purchasing managers' index fell to 49.4 in December, down from 49.7 in November.
But December's reading was better than the preliminary "flash" estimate of 48.3, although it marked the sixth consecutive month of contraction.
Meanwhile, data showed weekly jobless claims, considered a proxy for lay-offs, fell by more than expected, allaying fears of a slowing jobs market.
According to the Department of Labor, in the week ending December 28, the advance figure for seasonally adjusted initial claims was 211,000, a decrease of 9,000 from the previous week's revised level.
The previous week's level was revised up by 1,000 from 219,000 to 220,000. FXStreet consensus was for a slight increase to 222,000 in the most recent week.
The 4-week moving average was 223,250, a decrease of 3,500 from the previous week's revised average. The previous week's average was revised up by 250 from 226,500 to 226,750.
Nancy Vanden Houten at Oxford Economics said the claims data are consistent with a labour market that is "strong enough to allow the Federal Reserve to proceed with rate cuts at a more measured pace in 2025".
"The level of initial claims is consistent with a relatively low pace of layoffs, and while the level of continued claims suggests unemployed workers face some challenges finding new work, the recent decline in continued claims is encouraging. Our baseline is for three rate cuts this year, although the risk following the mid-December FOMC meeting is for fewer cuts."
The pound was lower at USD1.2378 on Thursday afternoon, from USD1.2535 at the time of the local equities close on Tuesday, its lowest level since last April.
The euro slid to USD1.0251 against USD1.0402. Versus the yen, the dollar was higher at JPY157.63 from JPY156.74.
On London's FTSE 100, gold miners Fresnillo and Endeavour Mining rose 4.5% and 4.9% respectively after fresh gains in the price of the yellow metal.
Oil majors BP and Shell climbed 2.6% and 2.3% respectively, tracking a rise in the price of Brent crude.
A barrel of Brent rose to USD76.43 on Thursday afternoon, from USD74.21 at the time of the London equities close on Tuesday. Gold jumped to USD2,657.49 an ounce from USD2,610.61.
Marks & Spencer rose 3.7% on speculation the retailer has enjoyed a strong Christmas. Next was also in demand, up 2.1%.
Both retailers will issue Christmas trading statements next week.
Russ Mould, investment director at AJ Bell said: "Judging by its share price jump, investors are putting their money on Marks & Spencer to have cleaned up over the festive season. There were already reports pre-Christmas that shoppers were loading up their baskets with Marks & Spencer's premium-quality food and drink products, and its clothes were such a big hit with the nation during 2024 that it seems logical to suggest many people gifted them on December 25."
Investors also weighed data showing the UK manufacturing sector downturn deepened more sharply than expected in December, with the fastest rate of decline since last January.
According to S&P Global, the UK manufacturing purchasing managers' index fell to an 11-month low of 47.0 in December, from 48.0 in November. The final reading was below the flash estimate of 47.3 points.
Survey respondents pointed to depressed market confidence and restructuring in response to upcoming increases to the minimum wage and employers' national insurance contributions.
But Elliott Jordan-Doak at Pantheon Macroeconomics struck an optimistic note.
"Despite the weakness in the manufacturing PMI in December, we think that it will steadily improve in 2025. Businesses have been rocked by domestic policy changes in the form of NICs hikes, and external shocks in the form of the threat of a global trade war. But, the budgetary plans are for more spending than taxation, which will mechanically lift the PMI. What's more the focus on investment in the budget should help the manufacturing sector. The [Monetary Policy Committee] will also cut rates in 2025, which will reduce borrowing costs for firms and should boost sentiment. We expect three cuts in 2025, one more than the market is currently priced for."
The picture was no brighter in Europe where a report showed the eurozone manufacturing sector remained in decline.
The Hamburg Commercial Bank purchasing managers' index fell to 45.1 points in December, from 45.2 in November. The latest figure was further below the 50-point neutral mark and was a three-month low.
"The year was closed off with accelerated contractions in both new orders and output, while sharp reductions were made to purchasing activity and inventories of inputs. Factory employment levels also continued on a downward trend, but there was a modest improvement in business confidence as growth expectations hit a four-month high," S&P Global said.
On a quiet day for company news, Revolution Beauty shot up 31%, after a claim by Chrysalis Investments was settled. Chrysalis traded down 2.1%.
Chrysalis, a former shareholder in the beauty products seller, said Revolution will pay "a non-material sum". The figure is less than 1% of the Chrysalis market capitalisation of around GBP613.3 million at the time of Tuesday's close in London.
Analysts at Panmure Liberum said: "We think this removes a significant risk [for Revolution] that had previously stopped potential new investors in the shares. With Chrysalis being one of the biggest investors in Revolution Beauty at the time of IPO, we believe this outcome draws a line in the sand for any similar claims as they are unlikely to be worthwhile. While there is still an on-going Financial Conduct Authority investigation, the settlement with Chrysalis makes the investment case much simpler at a time when the business is turning a corner."
Elsewhere, shares in Poolbeg Pharma slumped 38% after it said it was in talks regarding an all-share combination with US-listed biopharmaceutical company Hookipa Pharma.
Emmerson leapt 20% after securing a USD11 million litigation funding deal which it said "secures the medium-term future of the company."
On Friday, the ISM manufacturing PMI will be the highlight of the global economic calendar. The corporate diary is empty.
By Jeremy Cutler, Alliance News reporter
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