LONDON MARKET CLOSE: Stocks end higher, shaking off US nonfarms beat

(Alliance News) - Stocks in Europe ended higher on Friday, growing in confidence as the afternoon wore on, despite being initially unnerved by a stronger-than-expected US labour market reading.

Robust US data could be seen as a bearish signal, amid the fear that it would keep interest rates higher for longer. Stocks initially suffered after the data and the dollar climbed, though the mood brightened towards the end of the European session.

The FTSE 100 index closed up 43.04 points, 0.6%, at 7,494.58. The FTSE 250 added 132.34 points, 0.8%, at 17,732.32, and the AIM All-Share inched down just 0.03 of a point at 694.71.

For the week, the FTSE 100 fell 1.5%, the 250 lost 3.0% and the AIM All-Share gave back 4.3%.

The Cboe UK 100 was rose 0.7% to 748.57, the Cboe UK 250 also climbed 0.7%, closing at 15,437.49. The Cboe Small Companies fell 0.6% to 13,165.05.

In European equities on Friday, the CAC 40 in Paris rose 0.9%, while the DAX 40 in Frankfurt shot up 1.1%.

The pound was quoted at USD1.2226 late Friday in London, higher compared to USD1.2164 at the equities close on Thursday. The euro stood at USD1.0576, higher against USD1.0526. Against the yen, the dollar was trading at JPY149.18, up compared to JPY148.83.

Stocks in New York were higher. The Dow Jones Industrial Average rose 0.2%, the S&P 500 index 0.1%, and the Nasdaq Composite up 0.3%.

According to data from the Bureau of Labor Statistics, US nonfarm payrolls rose by 336,000 in September, significantly above FXStreet-cited consensus of 170,000. The September read was also above the 227,000 jobs added in August.

Growth in pay slowed, however. Average hourly earnings rose 4.2% in September on-year, missing consensus of a 4.3% rise and down from a 4.3% rise in August. Earnings rose 0.2% in September from August. They had also risen 0.2% in August from July.

"Overall, the report suggests the labour market is enjoying a soft landing. If payrolls continue to rise at an elevated pace, then the Fed might be tempted to push on with further rate hikes. That said, with wage growth and price inflation rapidly fading and the rise in long yields triggering a significant tightening in financial conditions, we still think the Fed is done hiking," Capital Economics analyst Paul Ashworth commented.

Dutch bank ING also believes another hike is unlikely, though Friday's data keeps the prospect of one on the table.

"US payrolls surged in September, with upward revisions underscoring the strength seen in economic activity over the summer. While we doubt this can last, today's number keeps alive the prospect of another rate hike and certainly backs the Federal Reserve's argument on the need for interest rates to stay higher for longer," ING's James Knightley commented.

"We would still argue that monetary policy is restrictive enough and we don't think that the Fed will hike again, but hot inflation will ensure we hit 5% on the US 10-year Treasury yield."

The 10-year yield spiked to just shy of 4.89% after the US jobs data, but cooled to 4.78% at the time of the European equities close.

In the FTSE 100, Aviva rose 5.3% as chatter around a potential takeover pleased investors.

Citing "City sources", the Times early Friday said at least two potential suitors are looking closely at London-based Aviva.

Names of potential bidders mentioned include Germany's Allianz, Denmark's Tryg, and Canada's Intact Financial, the Times said. One of them is mulling a GBP6 per share offer, the newspaper said.

In the FTSE 250, JD Wetherspoon lost 6.6%.

The Watford, Hertfordshire-based pub and hotel chain swung to a pretax profit before separately disclosed items of GBP42.6 million in the financial year that ended July 31, from a loss of GBP30.4 million the year before.

Total pretax profit was GBP90.5 million, up from a GBP26.3 million profit the year before. The difference between the two measures in both years was mostly finance income, partially offset by property losses.

Chair Tim Martin said the company currently anticipates a "reasonable outcome" for the financial year, subject to its future sales performance.

Frasers Group climbed 2.2%, while boohoo added 1.1%. According to a regulatory filing, Frasers has lifted its stake in the online retailer to just above 13%, from just over 10% previously.

boohoo on Tuesday said that for the six months ended August 31, revenue fell 17% to GBP729.1 million from GBP882.4 million a year prior. The fast fashion firm's pretax loss stretched to GBP26.4 million from GBP15.2 million.

boohoo said consumer demand was hurt by tough economic conditions.

Looking to the full-year, boohoo now predicts its revenue will decline between 12% and 17% from GBP1.77 billion achieved the year prior. This is due to the "slower volume recovery than previously anticipated" and the company plotting "more profitable sales within our labels". Its previous revenue forecast ranged from a flat outcome to a 5% decline.

Tribal Group added 37%. It late Thursday recommended a takeover approach with an implied enterprise value of GBP172.3 million, from Ellucian, a US software provider to the education sector.

The Bristol-based educational software and services provider said the cash deal was worth 74 pence per share and valued the business on a fully diluted basis at GBP159.5 million.

It represents a 41% premium to the closing price of 52.30 pence in London on Thursday.

Brent oil was quoted at USD84.22 a barrel at midday in London on Friday, down from USD84.56 late Thursday. Gold was quoted at USD1,831.35 an ounce, up against USD1,815.53.

Monday's economic calendar has German industrial data at 0700 BST.

The local corporate calendar has annual results from pharmaceutical company Sareum Holdings.

By Eric Cunha, Alliance News news editor

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