LONDON MARKET MIDDAY: Stocks Buoyant Ahead Of US Jobs Report

LONDON (Alliance News) - UK stocks have continued their positive start to the fourth quarter, posting broad-based gains Friday, with investors looking ahead to September's US jobs report later in the afternoon.

US nonfarm payrolls, unemployment rate and wage data are due at 1330 BST, as speculation about when the US Federal Reserve will raise US interest rates continues. The Federal Open Market Committee left rates unchanged at 0-0.25% in its last monetary policy meeting, citing concerns on global economic developments, especially in China.

It also noted in its statement from the last meeting that an interest rate hike "will be appropriate ... when it has seen some further improvement in the labour market" and is "reasonably confident" that currently very low inflation will rise back to normal levels.

The next FOMC meeting is scheduled for October 27-28.

The strength of the US labour market has been a key support for an earlier rate hike, with analysts saying that the movement towards full employment will eventually support inflation which fell into deflation in August. The FXStreet consensus is for 203,000 jobs created in September, with the unemployment rate to remain steady at 5.1%.

Societe Generale analysts are much more optimistic than consensus, expecting nonfarm payrolls to accelerate by 225,000 in September from the lowly 173,000 seen in August, which the French bank believes will be revised significantly higher.

"Overall, the report should signal a continued tightening of the labour market," SocGen said.

Jasper Lawler, market analyst at CMC Markets noted that concerns about the global economy have outweighed fears of a US rate-hike in equity markets, which declined mid-September when the Fed said it is keeping rates on hold.

"A jobs number that beats expectations and gives the Fed ammunition to signal its confidence in the US and even global economy by hiking interest rates this year, may well trigger a rally in equities," Lawler added.

US futures were pointing to a positive open ahead of the jobs report, with the DJIA and S&P 500 both pointed up 0.4% and the Nasdaq 100 up 0.5%.

The FTSE 100 traded up 1.6% at 6,167.99 points, the FTSE 250 was up 0.7% at 16,888.07 and the AIM All-Share index was up 0.3% at 729.04.

In Europe, the CAC 40 in Paris was up 2.0% and the DAX 30 in Frankfurt was up 1.6%.

On the London Stock Exchange, UK banks were making headway after the UK's Financial Conduct Authority said it is opening a consultation on introducing a deadline for consumers to make complaints on mis-sold payment protection insurance or lose their rights to have the claims assessed by firms or by the Financial Ombudsman Service.

Confirming recent press speculation, the City regulator said it intends to consult on a deadline which would fall two years from the date the proposed rule would come into force which, subject to the consultation, would not be before spring 2016, meaning consumers would have until at least spring 2018 to make their complaints.

Banks have already set aside close to GBP30 billion for PPI mis-selling compensation, with the state-backed Lloyds Banking Group responsible for almost half that sum. Lloyds traded up 3.0%, while Barclays was up 2.3% and HSBC Holdings was up 2.1%.

Despite having no PPI exposure, Standard Chartered was the top blue-chip gainer, up 4.9%, amid some rebound in confidence in emerging markets.

Legal and General Group shares were up 3.3% after the life insurer and investment manager said it has secured an agreement with the US arm of Dutch electronics company Royal Philips to provide retirement payments under a group annuity contract.

The contract will cover around 14,000 Philips employees in the US and will cut the company's pension obligations when the contract transfers in December. L&G said the transfer of the USD900.0 million in retiree pension obligations will be split between Legal & General America and The Prudential Insurance Co of America, with each insurer providing 50% of the total monthly benefits.

On the other side of the index, Experian traded down 4.7% after the information services and credit reports company confirmed its North American unit has been subject to a data breach. The firm's Experian North America unit confirmed its consumer credit bureau division was breached by a data hack.

Specifically, the server handling information on behalf of client T-Mobile USA, the mobile carrier, was breached. The data includes personal information on around 15 million US consumers, including those who applied for T-Mobile post-paid services or device financing from September 1, 2013 to September 16, 2015, based on the investigation Experian has so far conducted.

Barclays said that while this breach is a "bad headache", it is "not a migraine" and expects near term costs to be limited to below USD10 million for Experian, with other expenses covered by insurance. The bank added that it does not expect the event to trigger a mass exodus of clients, although that will depend on the robustness of Experian's response and the steps it takes to shore up security.

In the FTSE 250, Paragon Group of Companies said its Paragon Bank business has struck a GBP117.0 million deal to acquire Five Arrows Leasing Group from Rothschild & Co, the boutique investment bank. Five Arrows provides equipment, vehicle and construction equipment financing and provides lease servicing.

At the end of March, it had assets of GBP245.1 million on its books and for the year to that date, the company made a pretax profit of GBP10.2 million. Paragon expects the deal to complete by November and expects the deal to be earnings enhancing in its 2016 financial year. It added the acquisition will take its Paragon Bank business from break-even to profitability. The company's shares were trading up 9.8%.

In the AIM All-Share index, Churchill Mining traded down 17% at 19.39 pence after the miner said it has conditionally raised GBP750,000 through the placing of 4.2 million shares at 18 pence each, together with the issue of warrants on the basis of one warrant for every two placing shares exercisable at 27p each.

It said that the warrants will be exercisable until October 31, 2018, and the proceeds of the placing will provide the company with additional funding to progress its international arbitration claim against the Republic of Indonesia, as well as for general working capital.

Aside from the US jobs report, US ISM New York index is at 1445 BST and US factory orders is at 1500 BST. Fed Vice-President Stanley Fischer will be speaking at 1800 BST, after the close of European equity markets.

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

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