LONDON MARKET CLOSE: FTSE 100 Above 7,000 As Pound Sinks On Weak PMI

LONDON (Alliance News) - Stocks in London ended higher on Friday, with the FTSE 100 closing above the 7,000 mark, as weakness in the pound, a strong jobs report from the US and hopes on a trade breakthrough between the US and China boosted sentiment. The two-day US-China trade talks ended on a positive note and suggested that the US delegation will visit China in mid-February for a fresh round of trade talks.While China promised to "substantially" expand purchases of US goods, US President Donald Trump said the trade dispute would hopefully be resolved before the March 1 deadline.The FTSE 100 index closed up 51.37 points, or 0.7%, at 7,020.22, ending the week up 3.1%. This was the first time the large cap index closed above the 7,000 mark since early December. The FTSE 250 ended up 99.62 points, or 0.5%, at 18,811.37, ending the week up 0.9% and the AIM All-Share closed up 3.26 points, or 0.4%, at 922.40, ending the week up 1.2%.The Cboe UK 100 ended up 0.8% at 11,922.70, the Cboe UK 250 closed up 0.6% at 16,800.46, and the Cboe Small Companies ended down 0.4% at 11,274.64."With the Chinese hailing great progress in recent talks and Trump calling for another meeting with Chinese President Xi Jinping the market is slowly coming around to the idea that the two sides could slowly be moving towards some form of agreement. For now, this is enough to lift sentiment. As we move closer to the trade truce deadline investors will want more evidence of progress to keep the markets buoyant," said City Index analyst Fiona Cincotta.The pound was down, quoted at USD1.3099 at the London equities close, compared to USD1.3137 at the close Thursday, following disappointing UK manufacturing PMI data. UK manufacturing growth slowed more-than-expected in January to its lowest level in three months, survey data from IHS Markit showed.The IHS Markit/CIPS Purchasing Managers' Index for manufacturing fell to 52.8 from 54.2 in December. Economists had forecast a score of 53.5.A PMI reading above 50 suggests growth in the sector. The latest reading was the second-weakest since July 2016, which was the first month after the Brexit referendum.The survey showed that manufacturers boosted their stockpile of inputs at a record rate as the UK's departure from the European Union, on March 29, draws ever closer. "It's true that stockbuilding in the manufacturing sector looks set to be unusually strong. At face value, that could add around two percentage points to GDP growth. But as much of these stocks are imported, imports will also receive a boost, meaning there should be an offsetting drag on growth from net trade," said analysts at Capital Economics. On the London Stock Exchange, Fresnillo ended as the worst blue chip performer, down 3.4% as the Mexican gold miner tracked spot gold prices lower.Gold was down, quoted at USD1,316.80 an ounce at the London equities close against USD1,322.57 late Thursday. The precious metal retreated from eight-months highs reached on Thursday as demand for safe-haven assets waned. Glencore closed down 1.4% after the commodities house reported strong growth in annual production, despite issues with one of its subsidiaries in the Democratic Republic of the Congo.Problems continue at subsidiary Katanga Mining's cobalt operations in the DRC as the government on Wednesday requested the creation of an ion exchange plant be suspended.Own-sourced copper production was up 11% in 2018 to 1.5 million tonnes, which mainly reflected the restart of Katanga Mining's processing operations in late 2017. Copper sales in 2018 were around 22,000 tonnes lower than production due to timing of shipments, Glencore added. In the FTSE 250, Metro Bank ended as the best performer, up 10% as the high street lender clawed back steep losses from last week. Metro Bank confirmed on Thursday it was UK regulators who initially uncovered irregularities in its loan book and not the company itself. The stock closed down 11% on Thursday and plunged 39% last Wednesday on the news of the accounting error.At the other end of the midcap index, TalkTalk Telecom Group closed down 4.8% after the home phone and broadband provider warned earnings for its current financial year are set to miss analyst consensus. Looking to its year ending March, TalkTalk said its underlying business in on track with "significant" year-on-year headline profit growth expected. It is guiding for headline earnings before interest, tax, depreciation, and amortisation of GBP245 million to GBP250 million, from GBP197 million a year prior. This is below consensus, however, of GBP259 million. Earnings will be hit between GBP10 million to GBP15 million due to accounting changes, investment and mix in the Fibre segment. TalkTalk is confident on "strong" earnings growth in its year ending March 2020, and should meet market expectations of GBP271 million. In Paris the CAC 40 ended up 0.4%, while the DAX 30 in Frankfurt ended down 0.1%.The euro was marginally higher, quoted at USD1.1475 at the European equities close, against USD1.1450 late Thursday.Eurozone consumer price inflation slowed for a third month in January to its lowest level in nine months on weaker energy price growth, while core inflation accelerated as services costs grew at a faster rate.The consumer price index rose 1.4% on a annual basis in January after a 1.6% increase in December, preliminary data from Eurostat showed. The latest inflation figure was in line with economists' expectations.Inflation was the lowest since April last year, when it was 1.3%.Core inflation, which excludes prices of energy food, alcohol and tobacco, accelerated to 1.1% in January from 1.0% in December. Economists had expected the rate to remain steady.The European Central Bank targets inflation "below, but close to 2%".Elsewhere, the latest survey data from IHS Markit showed that the eurozone manufacturing sector moved closer to stagnation in January amid a modest gain in output and a sharp fall in new orders.The final Eurozone manufacturing Purchasing Managers' Index dropped to 50.5, in line with the flash estimate, from 51.4 in December. A PMI reading above 50 suggests growth in the factory sector.Individual surveys showed that the factory PMI slid to a 50-month low of 49.7 in Germany, worse than the flash reading of 49.9. Italy's measure was the lowest in 68 months at 47.8.Meanwhile, the manufacturing PMI climbed to a three-month high of 51.2 in France, in line with the flash reading, and rose to its highest level in two months of 52.4 in Spain."Today's data paint a mixed picture of the state of the eurozone economy. We now see only a modest chance for a significant uptick in activity in Italy, with at best a stabilisation in the first quarter. However, firm Spanish manufacturing PMI readings and rise in core inflation hint that there is still hope for a rebound in growth in the bloc", said analysts at Oxford Economics "Accordingly, we still expect the ECB to hike rates in the fourth quarter of 2019, but we acknowledge the increased risks for a later hike, particularly if core inflation fails to rise as expected," Oxford Economics added. Stocks in New York were higher at the London equities close after US nonfarm payrolls smashed expectations and well-received earnings from US oil majors. The DJIA was up 0.5%, the S&P 500 index 0.2% and the Nasdaq Composite 0.1%.The US Labor Department said nonfarm payroll employment surged up by 304,000 jobs in January compared to economist estimates for an increase of about 165,000 jobs.However, the report also showed the spike in employment in the previous month was downwardly revised to 222,000 jobs from the initially reported 312,000 jobs."Yet another stellar month of US job creation has provided more good news for investors, who have not exactly been short of positivity of late. Earnings, a dovish Fed and a seemingly inexhaustible supply of new workers have all contributed to more gains for equity markets," said IG chief market analyst Chris Beauchamp.In addition, Andrew Hunter, Senior US Economist at Capital Economics, said the jump in employment in January still provides "further evidence that economic growth remains solid and that the government shutdown had little impact".Traders also shrugged off the unexpected increase in the unemployment rate to 4.0%, as the uptick reflected a rise in workers on temporary layoff as a result of the government shutdown.In corporate news, Chevron was up 3.1% in New York after the oil major reported record annual net oil-equivalent production of 2.93 million barrels per day for full year 2018, which was 7% higher than a year earlier. The company expects that 2019 production will continue to grow by 4% to 7%, excluding the impact of asset sales.For the fourth-quarter, reported earnings came in at USD3.7 billion, compared with USD3.1 billion in the fourth quarter of 2017, which included USD2.02 billion in tax benefits related to US tax reform. Exxon Mobil was up 3.9% despite a 28% decline in profit in the fourth quarter from last year, when results were aided by benefits related to the US tax reform. The world's largest publicly traded oil and gas company's fourth-quarter net income fell to USD6.00 billion or USD1.41 per share from USD8.38 billion or USD1.97 per share in the prior-year quarter.On a positive note, Exxon Mobil's oil-equivalent production rose to 4.01 million oil-equivalent barrels from 3.99 million oil-equivalent barrels per day last year.Brent oil was quoted at USD61.90 a barrel at the London equities close, down from USD62.05 at the close Thursday.The economic events calendar has UK construction PMI at 0930 GMT. There is also Italy inflation readings and eurozone producer prices at 1000 GMT. Financial markets in China are closed on Monday for Chinese New Years Eve and will remain closed for the rest of the week. The UK corporate calendar on Monday has third-quarter results from budget airline Ryanair Holdings.