(Alliance News) - London's FTSE 100 closed lower on Friday, hurt by weak utilities stocks, as investors assessed a mixed US jobs report.
The FTSE 100 index closed down 40.77 points, 0.5%, at 8,308.61. The FTSE 250 ended up 57.94 points at 21,059.00, and the AIM All-Share closed up 1.30 points, 0.2%, at 738.22.
The Cboe UK 100 ended down 0.5% at 834.32, the Cboe UK 250 closed up 0.3% at 18,536.44, and the Cboe Small Companies ended up 0.8% at 16,210.46.
For the week the FTSE 100 rose 0.3%, the FTSE 250 gained 1.4% and the AIM-All Share climbed 1.1%.
In European equities on Friday, the CAC 40 in Paris ended up 1.3%, boosted by strength in luxury goods stocks. The DAX 40 in Frankfurt ended up 0.1%.
Stocks in New York were mixed at the London equities close, with the DJIA down 0.1%, the S&P 500 index 0.3% higher, and the Nasdaq Composite 0.6% to the good.
According to Bureau of Labor Statistics, total nonfarm payroll employment rose by 227,000 in November, following an upwardly revised total of 36,000 in October.
Last month's figure was increased from 12,000, while November's total topped FXStreet consensus for a rise of 200,000. September's figure was revised up by 32,000 to 255,000 from 223,000.
October's figures were distorted by the impacts of hurricanes and strikes.
The BLS said the unemployment rate rose to 4.2% from 4.1%, in line with expectations.
Wells Fargo said the payrolls figure was "robust" but the separate household survey was "underwhelming".
"The unemployment rate rose by one-tenth of a percentage point, the labour force participation rate fell one-tenth, and the underlying details of the survey were indicative of a labour market that continues to lose momentum gradually," it observed.
"Perhaps the only "hot" component of the report was the 0.4% increase in average hourly earnings that pushed the year-ago change for wages back up to 4.0%."
"On balance, today's employment data further reinforces our view that the FOMC will reduce the federal funds rate by 25 bps at its upcoming meeting," Wells Fargo said.
Citi's Andrew Hollenhorst felt the increase in the unemployment rate should be "more than enough evidence for Fed officials to conclude the job market is softening and cut in December".
"Payrolls were close to consensus", he observed, but "we think the unemployment rate is the better signal to watch in this labour market".
While investors weighed the labour market, the Federal Reserve said that inflation should remain the central bank's priority.
"I continue to see greater risks to the price stability side of our mandate, especially when the labour market continues to be near full employment," Fed governor Michelle Bowman told a virtual event hosted by the Missouri Bankers Association.
"I think we're still seeing that the US economy is strong," added Bowman, a permanent voting member of the Fed's rate-setting committee.
"But core inflation continues to be elevated," she said, referring to the underlying measure of inflation which strips out volatile food and energy costs.
The Fed's favoured inflation gauge ticked up slightly in October to 2.3%, slightly above the Fed's long-term target of two percent.
The pound was quoted higher at USD1.2748 at the London equities close on Friday, compared to USD1.2717 at the close on Thursday.
The euro stood at USD1.0569 at the European equities close on Friday, down against USD1.0568 at the same time on Thursday.
According to Eurostat gross domestic product in the eurozone expanded by 0.4% in the three months that ended September 30 from the three months that ended June 30. Growth picked up from 0.2% in the second-quarter from the first.
Year-on-year, the eurozone economy increased by 0.9% in the third-quarter, accelerating from a 0.5% increase in the second-quarter.
It was the fastest pace of annual growth since the first-quarter of 2023. Quarter-on-quarter growth was the strongest since the third-quarter of 2022.
Against the yen, the dollar was trading higher at JPY149.83 compared to JPY150.17 late Thursday.
On London's FTSE 100, property stocks and housebuilders took heart from figures from Halifax which showed UK house prices have risen at their fastest pace in two years.
The average house price was up 4.8% in November from a year prior, the biggest annual jump since November 2022. The average price climbed 1.3% from October to a record GBP298,083, the fifth monthly rise in a row.
Property portal Rightmove gained 1.4%, Barratt Redrow rose 1.1%, Vistry firmed 0.8% and Persimmon advanced 0.7%.
But fellow builder Berkeley missed out, falling 0.8%.
The Surrey, England-based property developer and housebuilder said there was good underlying demand for homes, as it reported revenue increased 7.2% in the six months to the end of October to GBP1.28 billion from GBP1.19 billion a year before.
But pretax profit was down 7.7% in the half-year to GBP275.1 million from GBP298.0 million in the first half of financial 2024.
Weighing on the blue-chip index, water suppliers Severn Trent and United Utilities were both down 3.1%.
Jefferies downgraded both to 'hold' from 'buy'.
While "cautiously optimistic" about the December 19 Final Determinations for the UK water sector, Jefferies thinks the the risk-reward looks more balanced on United Utilities and Severn Trent at their current valuations."
Morgan Stanley downgraded the European utility sector to 'in-line' from 'attractive'.
"With a finely balanced risk-reward outlook for 2025 amidst multiple uncertainties, we move our sector view to in-line. We prefer electricity networks, and would be selective elsewhere."
National Grid, down 1.5%, remains its top pick. SSE, another favoured Morgan Stanley stock, fell 1.3%.
Aviva was on the back foot, down 1.4%, after taking a step closer to sealing the takeover of Direct Line.
Direct Line rose 5.6% after it said it is "minded to recommend" an improved takeover approach from London-based insurer Aviva.
The proposed deal, announced in a joint statement, will see Aviva pay 129.7 pence in cash, and 0.2867 of a new Aviva share for each Direct Line share. Direct Line shareholders also would receive a 5p per share dividend before completion.
Based on Aviva's closing share price before the offer period started in November, the proposal values each Direct Line share at 275p, or around GBP3.6 billion.
Aviva's new plan represents a 10% premium to its initial approach of 250p per share made in November.
Matt Britzman at Hargreaves Lansdown felt the offer was "just too good to pass up".
"Direct Line’s board had been holding out, insisting they could make it on their own. But even they had to admit that Aviva’s proposal is a golden ticket they’d struggle to match independently," he added.
"Let’s not sugarcoat it: Direct Line has hit some serious potholes lately. Market share has been sliding, underwriting hasn’t exactly been flawless, and regulators have been knocking on the door."
Elsewhere, shares in National World rose 5.8% after said it was minded to accept an improved proposed offer from Media Concierge.
The Leeds-based owner of the Yorkshire Post and the Scotsman said Media Concierge had, on Tuesday, submitted a new 23 pence per share cash proposal. A bid at this level would value National World at around GBP61 million.
In a statement, National World said that it would be "minded to recommend" the improved proposal if a firm offer was made to shareholders on these terms.
In November, Media Concierge had offered 21p per National World share, valuing the firm at GBP56.2 million.
Media Concierge, a UK-based media representation and advertising services provider, is the largest shareholder in National World, with an around 28% stake.
Brent oil was quoted at USD71.22 a barrel at the London equities close Friday, down from USD72.22 late Thursday.
Gold was quoted at USD2,640.10 an ounce at the London equities close on Friday, up against USD2,635.39 at the close on Thursday.
Next week's UK corporate calendar has a trading statement from miner Anglo American, plus half-year results from industrial equipment supplier Ashtead and electricals retailer Currys.
The economic calendar sees interest rate decisions n Australia and Europe, US consumer inflation data and UK gross domestic product figures.
By Jeremy Cutler, Alliance News reporter
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