The moderately firmer close on the FTSE 100 index belied a severe drop mid-session after the eagerly-awaited US jobs report showed more Americans were out of work than expected last month, bringing the nation’s unemployment rate to a 26-year higher of 10.2%.
But hidden in the US labour report were a number of encouraging figures that, once digested, helped drag UK markets back out of the red. London’s blue-chip index finished the week up 2.0% overall.
The FTSE 100 index closed up 16.0 points or 0.3% on Friday to 5,141.7, having recovered from an intraday low of 5,077.9, while the FTSE 250 index added 53.5 points or 0.6% to 9,073.9. Other European indices were less fortunate, however, with the Spanish, French and Dutch markets failing to recoup losses before the close.
Non-farm payrolls for October fell 190,000—worse than the consensus forecast for a 175,000 drop, while the unemployment rate climbed from 9.8% in September to a higher-than-expected 10.2%: its highest rate since 1982. However, revised data from August and September showed fewer jobs lost in those months, and October’s temporary-help trends are also encouraging, Morningstar's Bob Johnson said in this video following the report.
Here in the UK, producer prices extended their climb for the eighth consecutive month in October, rising 0.2% following September’s 0.5% increase, compounding recent indicators that suggest the recession is coming to an end.
Banking stocks were among the gainers—in both the UK markets and their European counterparts—after Royal Bank of Scotland announced it slashed its losses by more than half in the third quarter. The bank, which is 70% owned by the British government and earlier this week announced several asset sales to appease the European Commission, reported an operating loss of £1.5 billion versus £3.5 billion in the previous quarter.
As such, RBS shares were the second highest gainers in Friday deals, closing 5.3% higher and tracked by peers Standard Chartered, Lloyds Banking Group and HSBC, each of which took on between 2.1% and 2.5%. Lloyds also benefited from a Citigroup upgrade to Buy and target price hike to 104p per share.
But it was British Airways that was the strongest performer on the final trading session of the week, jumping 6.7% after offering some reassuring comments about passenger and pricing trends. The national carrier reported a record net loss for the first half of £217 million but said October’s fall in premium traffic was substantially less severe than in previous months and passenger revenues are stable.
Miners were also in demand as the price of gold surged to a record high—more than $1,100 per ounce. Eurasian Natural Resources, Anglo American, Antofagasta and Rio Tinto gained 1.5%-2.0% each.
On the downside, Rentokil Initial was the main casualty, 6.3% behind as investors took the support services firm’s forecast-busting third quarter results as an opportunity to take profits.
Cadbury was another faller, down 0.5% as the November 9 deadline for predator Kraft to make a formal takeover bid for the confectioner loomed.
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