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LONDON (Alliance News) - Stocks in London were mixed midday Friday ahead of the June US jobs report, which will be closely watched by investors to see if the dismal report for May was a blip or a trend.

The jobs data due at 1330 BST include nonfarm payrolls, unemployment rate, labour force participation and earnings data.

The May nonfarm payrolls number came in significantly below expectations at 38,000 net new jobs, but according to FXStreet the consensus for June is for a significant rebound to an increase of 178,000 jobs. This would imply that momentum in the US labour market remains steady and the May figure was just a one-off.

Some market commentators pointed to the weak payrolls number in May as the reason the US Federal Reserve put off an interest rate increase in its June meeting. However, since then the UK vote to leave the European Union has caused more global uncertainty, meaning a strong number in June is unlikely to put the Fed back on course for an immediate rate hike.

"Whilst labour market data is an important release, Brexit most definitely dominates sentiment and a strong NFP figure is unlikely to change the likelihood of a US rate hike for July," commented Ana Thaker, market economist at PhillipCapital UK.

Elsewhere in the economic calendar, the Baker Hughes US oil rig count is issued after the London stock market close at 1800 BST, and US consumer credit is at 2000 BST.

The FTSE 100 traded down 0.1%, or 4.11 points, at 6,529.68 at midday. The FTSE 250 index traded up 1.2% at 16,092.79, continuing its recent out-performance against the blue-chip index, having lagged way behind in the days following the Brexit vote. The AIM All-Share index was up 0.4% at 701.92.

The UK visible trade deficit widened in May due to weak exports, data from the Office for National Statistics showed.

The deficit on trade in goods increased to GBP9.9 billion from GBP9.4 billion in April, but it was better than the expected deficit of GBP10.7 billion. This widening reflected a larger decrease in exports of GBP2.1 billion than the GBP1.6 billion fall in imports.

The deficit with European Union nations increased to GBP7.3 billion from GBP6.9 billion, while that with non-EU nations worsened to GBP2.6 billion from GBP2.5 billion.

"Today's data comes from May, yet this data will become progressively important in the coming months as we seek to determine whether the devaluation in sterling is having a material impact upon the demand for UK goods and services," said Joshua Mahony, market analyst at IG.

In European equity markets, the CAC 40 index in Paris was up 0.8% and the DAX 30 in Frankfurt was up 1.1%.

Futures pointed to a higher open on Wall Street, with the Dow Jones Industrial Average and the S&P 500 both pointed up 0.2% and the Nasdaq 100 up 0.1%.

On the London Stock Exchange, housebuilders, real estate investors and banks were rallying once again, regaining some of their post-referendum losses.

UBS published a note on UK housebuilders in which it said it sees upside for the sector following the recent sell-off and believes the market is too pessimistic about the effect of Brexit on the local housing market.

However, the FTSE 100 was being weighed down by heavily weighted defensive stocks which had performed particularly well amid the Brexit turmoil. Amongst the biggest fallers were British American Tobacco, down 2.5%, drinks maker Diageo, down 1.9%, and pharmaceutical company AstraZeneca, down 1.8%. BAT was cut by Barclays to Equal Weight from Overweight.

Oil majors were trading lower as investors shed defensive picks and reacted to the decline in oil prices. At midday Brent was trading at USD46.69 a barrel, down from USD47.74 at the London equities close on Thursday.

The US Energy Information Administration showed Thursday that US commercial crude stocks declined by less than expected. For the week ending July 1, oil stocks declined by 2.2 million barrels, slightly less than the expected 2.3 million barrels shrinkage. It was significantly less than the 6.7 million barrel decline in the American Petroleum Institute's crude oil stock, which was reported late Wednesday.

BP traded down 1.1%, and Royal Dutch Shell 'B' shares were down 1.9%.

Inchcape traded up 6.9% after Berenberg upgraded the car distributor and retailer to Buy from Hold. The bank believes the company's significant overseas exposure will mean it will not only benefit from currency translation, given the substantial fall in the pound following the UK's vote to leave the European Union, but its end markets will be more resilient than domestic focused peers.

Savannah Petroleum shares surged 40% to 33.0p after returning from suspension. Late Thursday, the company said it has raised USD40.0 million in a share placing in which 79.8 million shares were conditionally placed at 38p per share.

Savannah requested for its shares to be suspended in January this year after entering talks with another party that, if completed, would have led to a reverse takeover.

However, Savannah said it now plans to terminate those talks, after having completed a USD40.0 million share placing, providing the funds needed to develop its existing assets in the second half of 2016 and allowing the company's shares to resume trading on AIM.

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

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