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LONDON (Alliance News) - London stocks are set to open lower Monday, as investors continue to fear an earlier-than-expected US Federal Reserve rate hike following Friday's strong US jobs report.
The US Labor Department said Friday non-farm payroll employment jumped by 295,000 jobs in February, following a downwardly revised increase of 239,000 jobs in January. Economists had expected employment to increase by about 230,000 jobs compared with the addition of 257,000 jobs originally reported for the previous month. The better-than-expected data prompted some analysts to start looking at the summer for the Fed to raise interest rates.
"If interest rates rise in the US, there is a fear that the rally stock and bond markets will grind to a halt and move into correction mode as the yield on offer loses its attractiveness," says Craig Erlam, senior market analyst at Oanda.
"I guess it now depends on whether the strength of the market and earning potential of these companies now warrants further price rises in these stocks. The reaction to Friday?s jobs data would suggest that investors are not so sure," Erlam adds.
IG futures indicate the FTSE 100 to open 24.5 points lower at 6,887.3. The index closed down 0.7% at 6,911.80 Friday.
Wall Street ended lower Friday following the better-than-expected jobs data. The DJIA closed down 1.5%, the S&P 500 down 1.4%, and the Nasdaq Composite falling 1.1%.
In Asia Monday, the Japanese Nikkei closed down 1.0% following a downward revision to Japan's GDP growth.
Japan's gross domestic product expanded just 1.5% on year in the fourth quarter of 2014, the Cabinet Office said. That was well shy of forecasts for 2.2%, which would have been unchanged from the February 15 preliminary reading.
The Hang Seng trades down 0.1%, and the Shanghai Composite is up 1.9%.
China's trade surplus rose to a record high in February as exports surged due to the effect of the timing of the Lunar New Year, figures from the customs office showed Sunday. The trade surplus came in at USD60.6 billion in February, much more than the USD6 billion expected by economists. This was larger than the record high surplus of USD60 billion recorded in January and marked a new high.
Media buying giant WPP raised its total dividend by 12% and forecast a year of growth in 2015 similar to 2014, as it met expectations for headline profit before interest and tax, and earnings per share for 2014. WPP posted a headline profit before interest and tax of GBP1.68 billion for 2014, up from GBP1.66 billion in 2013, and in line with analyst expectations provided by the company of GBP1.67 billion.
The company's headline profit before interest and tax figure excludes amortisation, impairment, gains on disposals or re-measurement of equity interests, write-downs, restructuring costs of shares of exceptional losses of associates.
Antofagasta said copper production at its Los Pelambres Mine in Chile has so far been reduced by about 5,000 tonnes due to ongoing protests that are causing limited disruption at the site.
The miner said that a small group of protesters from the the local Choapa valley community established intermittent blockades at several points on the access road to the Los Pelambres mine late last month and have been there since. There has been damage to the office and minor equipment at the mine entrance and some facilities outside the mine limits have also been damaged.
Vodafone Group said its M-Pesa mobile money transfer and payment service has launched its first international money transfer corridor between Tanzania and Kenya. M-Pesa customers in these countries can now use their mobile phones for money transfers between countries via a combined network of 180,000 agents. Vodafone claims its service is cheaper than existing services.
Balfour Beatty said it has been appointed as civil contractor to the Thames Estuary Asset Management Programme, a deal that it thinks will be worth up to GBP250 million to the company. The programme is about flood risk, and involves improving flood defences along the Thames Estuary. It is a GBP300 million programme in total.
In the economic calendar, the US labour market conditions index is at 1400 GMT. A Eurogroup meeting will discuss the next steps following the decision to extend financial assistance to Greece for four months.
By Neil Thakrar; neilthakrar@alliancenews.com; @NeilThakrar1
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