FTSE close: Autonomy up; Connaught down

By Reuters
Updated: 12:57 EDT, 3 September 2010

Close: 17.00

London's blue chip share index secured its sixth winning session in a row today as better-than-expected jobs data helped extend the recent share rally.

The closely watched US non-farm payrolls were expected to show more than 100,000 jobs lost over the month, but the figure was far lower than expected at 54,000.

London's FTSE 100 Index rose 1% - up 57.1 points to 5428.2 - while markets worldwide also made strong advances on the news.

The Dow Jones Industrial Average on Wall Street lifted around 60 points higher, although early session gains pared back a little after economic data was also released on the US services sector.

The figures showed expansion for the eighth straight month in August, but the pace of growth slowed, according to a trade group survey.

Economic figures in the UK were also a disappointment, showing a slowdown in growth among services firms and a sudden slump in construction orders.

The pound largely held firm despite UK recovery fears, up fractionally against the dollar at 1.54 dollars, while it remained unchanged at 1.20 euros. In a quiet day for corporate announcements, the only major blue-chip to offer any news was oil giant BP, which said the costs of the Gulf of Mexico oil spill had risen to £5.2bn so far. Shares rose 9.1p to 401.7p.

IT firm Autonomy, power supplies company Aggreko and Cable & Wireless Worldwide - which have all been linked with vague takeover talk in recent days - led the advance, up 59p to 1775p, 79p to 1515p and 3.2p to 73p respectively.

Home Retail Group, the Argos and Homebase owner in line for demotion from the FTSE 100 next week, was among the fallers as the company slid 0.5p to 221.3p.

In the FTSE 250, troubled social housing firm Connaught was off 2.5p to 16.5p or 13% as worries over a potential debt-for-equity swap continued to hit the stock. Connaught - whose shares have been devastated by a succession of profit warnings - is set to be relegated to the ranks of the small-caps next week.

The firm was followed lower in the second tier by oil explorer Soco International, which slid 40p to 436.6p or 8% after drilling disappointment in the Congo. Spread betting firm IG Group was also on the back foot after brokers at UBS cut their rating to neutral, shifting shares down 12p to 511p or 2%.

But Currys and PC World owner DSG International ticked 1.1p ahead to 26.3p as Numis analysts raised full year profit forecasts following yesterday's trading update, which showed a 6% rise in UK like-for-like sales. Back in the top flight, supermarket Morrisons was down 1.7p to 289.3p after reports that the group is set to signal a move into online groceries in next week's results.

The biggest Footsie risers were Aggreko up 79p to 1515p, Cable & Wireless Worldwide up 3.2p to 73p, Barclays ahead 13p to 325p and Autonomy up 59p to 1775p. The biggest Footsie fallers were Tullow Oil down 29p to 1156p, African Barrick Gold off 9.5p to 602p, Randgold Resources down 65p to 5910p and Associated British Foods down 7p to 1065p.

14.45

Wall Street is poised for a strong opening today after better-than-expected US jobs data lifted optimism on the economy.

Dow futures climbed 1% or 101 points to 10,410 after the US Labor Department reported non-farm payrolls declined by 54,000 jobs last month, less than the 100,000 economists had expected.

In Europe, the FTSE 100 index rose 56.49 points to 5,427.53 while Germany's DAX climbed 88.86 points to 6,172.71. The CAC-40 in France was 54.96 points higher at 3,686.39.

'Not only were the August numbers pretty good, but the July numbers were also revised up - that is to say, better,' said Phil Orlando, chief equity market strategist at Federated Investors in New York.

'(Economic) numbers have started to get a little better, and this is another big number in that direction. This ought to drive the market higher, given relatively light volumes.'

Even so, it meant employment fell for a third straight month in August.

Traders now see about a 68% chance the Fed will increase its target interest rate at the US central bank's Sept 2011 meeting.

Oil nudged into positive territory when the figures were released, although the demand outlook was cautious.

US crude for October rose five cents to $75.07 a barrel, recovering from earlier losses, while ICE Brent rose 21 cents to $77.14.

12.45

The Footsie remains 26.3 points ahead at 5,397.3 despite a disappointing slowdown in growth among UK services firms and a sudden slump in construction orders reviving double dip recession fears.

The index remains on course for its sixth winning session in a row, advancing almost 6%.

Stock market futures point towards a higher opening on Wall Street.

Morrisons is down 0.3p to 290.7p after reports that the group is set to launch an online groceries business with next week's interims results. Rivals Sainsbury's and Tesco were off 1.2p to 369.1p and 1.55p ahead at 413.75p respectively.

In the second tier FTSE 250 oil explorer Soco International slides 39p to 437.8p after drilling disappointment in the Congo.

Spread betting firm IG Group was also on the back foot after brokers at UBS cut their rating to neutral, shifting shares down 10.5p to 512.5p.

11.00

Caution on behalf of traders awaiting US jobs data later today sees the FTSE 100 edge 9.38 up to 5,380.42.

This is the sixth straight day of gains - so far - after the London index closed 0.1% up yesterday. It is 3.4% up on the week, its strongest showing since early July.

But the non-farm payrolls figures from America - due at 12.30 GMT - are expected to show another 100,000 jobs lost in August, so gains could yet be dented.

'Everyone's holding their breath before payrolls,' said Richard Hunter, head of equities at Hargreaves Lansdown.

'The fact remains that sentiment remains very fragile, and we'll need a sustained set of positive news before that changes.'

In London the only major blue-chip to offer any news was oil giant BP, which said the costs of the Gulf of Mexico oil spill had risen to £5.2billion. Its shares edged 1.2p up to 393.85p.

The leading risers were IT firm Autonomy and power supplies company Aggreko, both linked with vague takeover talk which helped shares advance 45p to 1,761p and 34p to 1,470p respectively.

The biggest faller was Home Retail Group, the Argos and Homebase owner in line for demotion from the Footsie next week. The firm slid 2.4p to 219.4p.

In the FTSE 250 troubled social housing firm Connaught was off 0.7p to 18.2p as worries over a potential debt-for-equity swap continued to hit the stock.

Slim gains from miners and energy firms was what nudged the share index slightly higher this morning. Rio Tinto and Xstrata added 26.5p to 3,509.5p and 6p to 1,094p respectively.

Autonomy was the top gainer, up 58p to 1,774p, adding to gains the previous session. Lingering takeover talk has focused on Microsoft and Oracle.

Vodafone also provided support for the index, up 0.95p to 158p, lifted by a price target hike from Deutsche Bank, which has a 'buy' rating.

Stock moves around the world were very limited. The MSCI Asian stock index outside Japan added 0.2%.

In Japan, stocks rose 0.3%, with exporters among the best performers.

Some analysts say that given the gains in markets this week, unless payrolls surprise to the upside, the number could be used as an excuse to cash in profits.

'Just by the look of trade throughout Asia, my feeling is that risk is probably coming out of the markets heading into tonight,' said Ben Potter, market strategist at IG Index in Melbourne.

'People don't seem to want to carry a strong week's work over the weekend.'