London close: Markets boosted by US jobs report

7th Dec 2012 16:28

- Jobs reports lifts markets, but gains modest- Bundebank cuts German growth estimates- ECB rate cut speculation increasesThe Footsie finished with slight gains on Friday afternoon as some better-than-expected jobs data from the US managed to outweigh concerns about Germany's economy.Stocks started to the day on the back foot on the news that the Bundesbank now expects German gross domestic product (GDP) to grow by just 0.4% next year, down from its previous prediction in June for a 1.6% expansion. However, the closely-watched US employment report, out at 13:30 (London time), provided a boost to markets across the globe after non-farm payrolls rose by 146,000 in November, versus the 85,000 expected by the market. Meanwhile, the unemployment rate dropped from 7.9% to 7.7% over the month, compared with forecasts for no change."On a day that's seen lamentable GDP figures from both Portugal and Greece, as well as terrible industrial production numbers for Germany and the UK, continued chatter surrounding the seemingly inevitable removal of the UK's AAA rating and the single currency significantly marked down, the market's relative resilience seems an apt synopsis of 2012," said market analyst Michael Hewson from CMC Markets."It appears that no matter what picture the European macro backdrop paints, markets continue to take their lead from the US recovery story and a belief that equity valuations are attractive in its context," he said.In this regard, it is understandable why markets were volatile in late afternoon trade, with the University of Michigan consumer confidence index (released at 14:55) dropping from 82.7 to 74.5 in December, much worse than the expected fall to 82.0.Rolling on in the background was increasing speculation that the European Central Bank (ECB) may be considering cutting rates at the next policy meeting on January 10th. Bloomberg cited three officials close to the Governing Council's discussions who said that "a majority of the Council were open to cutting the benchmark rate yesterday".Analysts at Barclays Research said in an e-mail this afternoon: "Overall, such comments are in line with our baseline view that the ECB will lower the main policy rate during Q113, and they raise the chance that a rate cut could come as early as the next monetary policy-based meeting."FTSE 100: Defensive stocks lead risersDefensive stocks, such as those in the utilities, tobacco and pharmaceuticals categories, were performing well today, as they benefited from risk aversion which has put a dent in the mining sect this morning. Centrica, Imperial Tobacco and Shire were among the best performers. Polymetal was also putting in a decent performance. Shares have gained steadily over the last few days after the company revealed on Wednesday that it would give $191m back to shareholders following a solid set of financial results. Meanwhile, IAG was a stand-out faller. The company's airline, Iberia, is gearing up to deal with strikes ahead of the busy Christmas period. Workers are protesting over the company's plan to slash 22% of its workforce in 2013. Commodities trader and mining giant Glencore was trading lower despite receiving the approval from the Ministry of Commerce of the People's Republic of China for its acquisition of Viterra, the final regulatory green light needed to take over the Canadian agribusiness. Merger partner Xstrata joined Glencore in the red. Marks & Spencer was pulling back after a strong rise on Thursday. Market rumours yesterday linked retail tycoon Sir Philip Green to a possible bid for the High Street giant, as speculation followed Green's sale of a 25% stake in Top Shop last week. However an Arcadia spokesperson denied such speculation yesterday when questioned by Sharecast.FTSE 250: Berkeley boosted by strong interimsHouse builder Berkeley Group jumped early on after seeing revenue and profit surge in the first half, as it declared an interim dividend of 15p per share, compared with nil the year before. Revenue increased 69.4 per cent and pre-tax profit rose 40.7 per cent in the six months to October 31st. ITE Group made decent gains after Goldman Sachs raised its target price from 315p to 325p and reiterated its 'buy' recomendation. Meanwhile, Kenmare Resources shares retreated back after making gains the previous day following takeover speculation.FTSE 100 - RisersPolymetal International (POLY) 1,088.00p +2.06%Shire Plc (SHP) 1,900.00p +1.93%Burberry Group (BRBY) 1,305.00p +1.87%IMI (IMI) 1,090.00p +1.68%Centrica (CNA) 337.00p +1.63%Experian (EXPN) 1,051.00p +1.45%Johnson Matthey (JMAT) 2,443.00p +1.33%Diageo (DGE) 1,878.50p +1.32%Rolls-Royce Holdings (RR.) 896.50p +1.30%Evraz (EVR) 242.40p +1.21%FTSE 100 - FallersInternational Consolidated Airlines Group SA (CDI) (IAG) 171.20p -1.83%ITV (ITV) 101.80p -1.17%G4S (GFS) 249.20p -1.15%Pearson (PSON) 1,177.00p -1.09%Marks & Spencer Group (MKS) 393.60p -1.06%Standard Chartered (STAN) 1,485.50p -1.00%Admiral Group (ADM) 1,130.00p -0.88%Tesco (TSCO) 336.75p -0.84%British Sky Broadcasting Group (BSY) 761.50p -0.65%Serco Group (SRP) 545.00p -0.64%FTSE 250 - RisersITE Group (ITE) 225.00p +5.04%Berkeley Group Holdings (The) (BKG) 1,728.00p +4.73%Home Retail Group (HOME) 130.00p +4.00%PayPoint (PAY) 893.50p +3.90%Talvivaara Mining Company (TALV) 96.70p +3.87%New World Resources A Shares (NWR) 280.00p +3.70%Victrex (VCT) 1,630.00p +3.69%Lonmin (LMI) 265.00p +3.15%RPS Group (RPS) 212.00p +3.11%AZ Electronic Materials SA (DI) (AZEM) 380.30p +3.06%FTSE 250 - FallersKenmare Resources (KMR) 30.57p -3.93%Man Group (EMG) 73.65p -3.73%Jupiter Fund Management (JUP) 274.50p -3.68%Petropavlovsk (POG) 321.10p -3.14%Salamander Energy (SMDR) 172.30p -2.87%EnQuest (ENQ) 114.90p -2.63%Dialight (DIA) 1,073.00p -2.54%RIT Capital Partners (RCP) 1,120.00p -1.84%BH Macro Ltd. EUR Shares (BHME) € 19.00 -1.81%WH Smith (SMWH) 651.00p -1.66%BC