London close: Stocks rise as solid US jobs data hurts pound
London stocks finished the week on the charge as the dollar rallied on US jobs data and a solid performance from Royal Bank of Scotland offset by weakness in the housebuilding sector.
The FTSE 100 finished 36.94 points or 0.49% higher to 7,511.71 while the pound was 0.75% weaker versus the dollar at 1.3040 but up 0.2% against the euro at 1.1091.
The dollar bounced back from recent weeks' losses against the pound and euro as the US non-farm payrolls report showed America's economy continued creating jobs at a steady pace in July even as wage growth continued to remain moderate.
Jobs increased by 209,000 last month, with revisions to data for the previous two months adding 2,000 more people, according to the Department of Labor, pushing the jobless rate down to 4.3% even as the labour-force participation rate edged up from 62.8% to 62.9%.
Economists had forecast 183,000 new jobs and a one tenth of a percentage point dip in the unemployment rate from 4.4% in June to 4.3%.
"European and US markets are pushing higher after an overwhelmingly positive US jobs report, despite the fact that this greatly increased the likeliness of a third and final interest rate hike by the Federal Reserve in 2017," said Joshua Mahony, market analyst at IG.
"On this occasion it is a case of good news is good news, with US equity markets strengthening despite the rise in the dollar. While the stronger pound and euro have proved detrimental for the UK and Eurozone markets of late, it is clear that the US markets are less focused on a short term dollar rally, instead focusing on the improving economic picture."
Naeem Aslam at Think Markets said the there was nothing in the data that was extraordinary, giving Federal Reserve chief Janet Yellen "no reason to change her current stance on the monetary policy and hence the equity market is in love with today’s news - at least for now".
He added: "The question if the equity market is overvalued or over bought would require a separate article to explain the logic but in summary as long as the headline economic numbers do not upset the apple cart, I think there is more room to run for this equity market."
In London's corporate news, Royal Bank of Scotland rallied after it posted second quarter adjusted operating profits of £1.69bn, up from £761m one-year ago and ahead of analysts' forecast for £1.04bn. Tangible net asset value was up 3p to 300p on the quarter, impairments were 56% better than consensus, negative revenues within capital resolution were £101m better than consensus and NatWest Markets continued to perform extremely well.
Paysafe rose after recommending the £2.96bn cash takeover offer from private equity groups Blackstone and CVC.
Merlin Entertainments was on the front foot as it said revenues and visitor numbers rose in the first half of the year.
Oil services group Petrofac gushed higher after it won a $2bn, 47-month contract as part of a 50/50 joint venture with Samsung Engineering by Duqm Refinery and Petrochemical Industries in the southern part of Oman.
On the downside, housebuilders were under the cosh amid reports that the government's Help to Buy Scheme to support the housing market may be wound down within four years. Persimmon, Barratt Developments and Taylor Wimpey were among the worst performers. The government later insisted it was constantly reviewing its various programmes and very much supported this particular scheme.
Education publisher Pearson climbed initially before falling as it announced a 72% cut to its dividend and plans to cut 3,000 jobs as part of a restructuring. The former FT owner reported first-half adjusted operating profit of £107m, up from £15m and said its pre-tax loss narrowed from £306m to £10m.
Hargreaves Lansdown slumped after scrapping its special dividend, while Millennium & Copthorne reversed earlier losses as it posted a 12.5% rise in first-half pre-tax profit but sounded a cautious note on the outlook.
Aerospace and defence group Cobham was weaker as Societe Generale reiterated its ‘sell’ rating on the stock.
Gold and other precious metals miners Randgold, Fresnillo and Centamin were all down as the dollar's rise sent the price of the yellow metal lower.
Market Movers
FTSE 100 (UKX) 7,511.71 0.49%
FTSE 250 (MCX) 19,969.73 0.31%
techMARK (TASX) 3,457.49 -0.05%
FTSE 100 - Risers
Merlin Entertainments (MERL) 489.40p 5.75%
Mediclinic International (MDC) 756.00p 4.06%
Smurfit Kappa Group (SKG) 2,279.00p 2.80%
Royal Bank of Scotland Group (RBS) 261.20p 1.95%
Diageo (DGE) 2,503.00p 1.89%
Coca-Cola HBC AG (CDI) (CCH) 2,347.00p 1.87%
Scottish Mortgage Inv Trust (SMT) 422.30p 1.81%
Babcock International Group (BAB) 866.00p 1.76%
Rio Tinto (RIO) 3,546.00p 1.71%
International Consolidated Airlines Group SA (CDI) (IAG) 617.50p 1.65%
FTSE 100 - Fallers
Barratt Developments (BDEV) 589.00p -4.69%
Persimmon (PSN) 2,464.00p -3.98%
Taylor Wimpey (TW.) 187.90p -3.74%
Fresnillo (FRES) 1,457.00p -3.45%
Hargreaves Lansdown (HL.) 1,347.00p -2.60%
Shire Plc (SHP) 4,018.50p -2.42%
Pearson (PSON) 655.50p -2.02%
Randgold Resources Ltd. (RRS) 7,100.00p -1.87%
Convatec Group (CTEC) 284.50p -1.66%
Centrica (CNA) 199.70p -1.33%
FTSE 250 - Risers
Petrofac Ltd. (PFC) 483.00p 8.76%
Euromoney Institutional Investor (ERM) 1,175.00p 5.80%
Domino's Pizza Group (DOM) 273.50p 3.83%
Wizz Air Holdings (WIZZ) 2,824.00p 3.56%
Indivior (INDV) 400.80p 3.03%
Essentra (ESNT) 568.00p 2.99%
Thomas Cook Group (TCG) 116.10p 2.65%
Cineworld Group (CINE) 716.50p 2.50%
Northgate (NTG) 456.20p 2.49%
Smith (DS) (SMDS) 499.10p 2.30%
FTSE 250 - Fallers
Centamin (DI) (CEY) 155.20p -6.90%
Hochschild Mining (HOC) 303.30p -4.62%
Polymetal International (POLY) 894.00p -3.77%
Crest Nicholson Holdings (CRST) 521.00p -3.70%
Serco Group (SRP) 111.70p -3.64%
Cairn Energy (CNE) 172.60p -3.09%
Countryside Properties (CSP) 360.00p -2.99%
Bovis Homes Group (BVS) 989.00p -2.66%
Galliford Try (GFRD) 1,330.00p -2.35%
Tullow Oil (TLW) 176.40p -2.28%