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(Alliance News) - Stock prices in London were largely higher at midday on Friday, undeterred by further bad news for the UK manufacturing sector, as markets looked to incoming US jobs data with optimism.
The FTSE 100 index was up 48.79 points, or 0.7%, at 7,487.92. The FTSE 250 was up 45.92 points, or 0.3%, at 18,651.62, and the AIM All-Share was down 1.02 points, or 0.1%, at 740.91.
The Cboe UK 100 was up 0.5% at 745.30, the Cboe UK 250 was up 0.4% at 16,315.59, and the Cboe Small Companies was up 0.5% at 13,051.05.
Survey data from S&P Global showed the health of the UK manufacturing sector deteriorated to its lowest level since May 2020 in August.
The seasonally adjusted S&P Globa CIPS UK manufacturing purchasing managers' index stood at 43.0 in August, down from 45.3 in July but above an earlier flash estimate of 42.5.
Falling further below the 50.0 no-change mark, it shows the contraction in the UK manufacturing sector worsened last month, reaching its lowest level in 39 months.
However, despite the gloomy picture for the manufacturing sector, markets remained upbeat as they looked towards the latest US non-farms report due at 1330 BST.
Markets are expecting nonfarm payrolls to rise by 170,000 in August, down from 187,000 in July, according to FXstreet-cited consensus.
"A positive number, which in this case would be more than 170,000 new jobs created in August, could tip the scales and convince the more dovish policymakers to agree with another rate hike. Conversely, a disappointing number would almost certainly settle the issue, erasing any chance of further tightening in the short term," said Ricardo Evangelista, senior analyst at ActivTrades.
Currently, the market sees an 89% chance of the US central bank holding rates steady at its next meeting this month and a 53% chance of rates holding steady again at the following meeting in November.
Markets this week have been digesting a slew of softer economic data from the world's largest economy.
An inflation reading on Thursday showed that the US inflation remains more tame than when the Fed first started its tightening cycle, further fuelling hopes that interest rates have peaked.
The headline personal consumption expenditures reading was up 3.3% in July from a year before, the Bureau of Economic Analysis said, accelerating from a 3.0% annual rise in June.
Meanwhile, annual core PCE - the Federal Reserve's preferred inflationary gauge - came in line with market expectations, picking up to 4.2% in July from 4.1% in June.
In London, Johnson Matthey remained the FTSE 100's top performer at midday on Friday, up 11%. On Wednesday, FTSE Russell confirmed that the speciality chemicals firm would be removed from London's flagship index from the market open on Monday, September 18.
Next added 0.9% after it agreed to substantially boost its interest in the Reiss Group, buying an extra 21% stake for GBP128 million.
The clothing, footwear and home products retailer said it and the Reiss family will acquire the entire 34% interest in fashion brand Reiss from Warburg Pincus, a private equity firm headquartered in New York.
Next will buy 21% of the stake, increasing its interest to 72% from 52%, while the Reiss family will acquire the remaining 13% and increase its stake to 22%. The Reiss management team will hold the remaining 6%.
Next said it expects the acquisition to complete in mid-October this year. Following completion, it will consolidate Reiss's results into its own accounts.
In the FTSE 250, Direct Line fell 1.4% after the UK Financial Conduct Authority said the insurer charged existing home and motor customers more for their renewals than if they had been a new customer.
The FCA said Direct Line will carry out a voluntary review of past business to "identify all instances where a customer has been overcharged and provide appropriate redress" where its pricing rules were violated.
The company estimates the redress payments to customers will cost it around GBP30 million, for which half was provided in its 2022 results.
Elsewhere in London, Superdry shares remained suspended at 56.10 pence as it published its delayed annual results.
In the year ended April 29, the clothing retailer swung to a pretax loss of GBP78.5 million from a GBP17.6 million profit a year prior, as selling and distribution costs grew by 13% to GBP306.6 million.
Revenue grew marginally by 2.1% to GBP622.5 million from GBP609.6 million the year before.
Looking ahead, Superdry said it will focus on improving its costs through a GBP35 million cost savings programme and therefore does not expect to see "significant" revenue growth in financial 2024.
On AIM, Accsys Technologies plunged 24% as it reported weakening demand for its products.
The wood product maker explained that trading conditions in the building materials, construction and residential housing markets in the UK, Europe and North America have continued to soften in recent months. Further, it noted distributors of building products in the US and Europe have seen "significant" volume declines in the year-to-date.
Given this backdrop, Accsys now expects sales volumes and revenue for its full financial year to be below market expectations. Annual earnings before interest, tax, depreciation and amortisation are seen "significantly" below expectations.
In European equities on Friday, the CAC 40 in Paris was up 0.3%, while the DAX 40 in Frankfurt was marginally higher.
Stocks in New York were called higher ahead of another round of US economic data. The Dow Jones Industrial Average was called up 0.4%, the S&P 500 index up 0.3%, and the Nasdaq Composite up 0.1%.
The pound was quoted at USD1.2678 at midday on Friday in London, up from USD1.2671 at the London equities close on Thursday. The euro stood at USD1.0846, virtually unchanged against USD1.0847. Against the yen, the dollar was trading at JPY145.44, lower compared to JPY145.65.
Brent oil was quoted at USD87.92 a barrel at midday in London on Friday, up sharply from USD85.88 late Thursday. Gold was quoted at USD1,944.27 an ounce, higher against USD1,942.51.
Still to come on Friday, the US S&P Global manufacturing PMI and the US ISM manufacturing PMI will be released at 1445 BST and 1500 BST, respectively.
By Heather Rydings, Alliance News senior economics reporter
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