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US jobs numbers jolt FTSE 100 forward

US jobs numbers jolt FTSE 100 forward
  • US markets tick up as job creation flourishes
  • Markets surge as US job growth beats expectations
  • European markets shoot higher as investors re-evaluate Draghi comments
  • Better than expected US employment figures boost sentiment
  • Inmarsat beats expectations to top FTSE 250
  • British Airways owner IAG expects full-year loss
  • RBS suffers £1.5bn loss as mis-selling bill grows

16.40: Britain’s markets have raced ahead following positive US jobs figures, which revealed that 163,000 new private sector positions were created last month. 

The FTSE 100 jumped ahead 2.21%, or 125 points, to 5,787 and the Mid-250 index raced up 2.03%, or 224 points, to 11,301.

Today’s session saw Britain’s markets end the week in positive territory: the FTSE100 has added 160 points and the Mid-250 index gained 122 points.  

Insurer Aviva (AV.L) rose to the top of the index adding 20.6p, or 7.2%, to 305.8p after investment trust Alliance Trust agreed to take on £1.2 billion of the group’s assets from its sustainable and responsible funds early next year.

International Consolidated Airlines Group (ICAGF.L) shed 8.1p, or 5.1%, hitting 151p to claim bottom place on the FTSE 100 as the British Airways owner reported a €253 million (£200 million) operating loss in the first six months of the year.

European stock markets also flourished following the positive US jobs data: Germany’s DAX index took on 3.88% to 6,862, France's CAC 40 index rose 4.06% to 3,363, and the FTSEurofirst 300 index of top European shares took on 2.37% to 1,080.

US markets tick up as job creation flourishes

14.50: Wall Street has reacted positively to job figures showing 163,000 new private sector positions were created in July.

The Dow Jones Industrial Average rose 1.37% to 13,056, the S&P 500 added 1.43% to 1,384, and the Nasdaq Composite index added 1.39% to 2,950.

Despite a rise in the number of jobs, unemployment rose 0.1% to 8.3% last month, as 195,000 people claimed unemployment in the household survey.

It was hoped that poor figures could act as an incentive for policymakers at the Federal Reserve to promise more stimulus in the coming months. However, the number of jobs created has cheered the markets.

However, the US dollar index weakened 0.61% to 82.8 cents against other major currencies following the figures as unemployment climbed.

Markets surge as US job growth beats expectations

13.35: Closely watched US jobs figures have given a mixed reading on the health of the US economy.  

US non-farm employment increased by 163,000, ahead of forecasts of 101,000, in July. However, unemployment increased to 8.3% from 8.2% last month, which is slightly worse than expected.  

Britain’s markets are reacting positively to the figures as the FTSE 100 rose to 1.48% to 5,746 and the Mid-250 index took on 1.43%, to 11,235.

It was hoped poor figures would set the tone for further stimulus from the US Federal Reserve. The effect on Wall Street has yet to be seen when markets open stateside.  

Inmarsat beats expectations to top FTSE 250

12.45: Satellite services provider Inmarsat (IS) rose to the top of the FTSE 250 index, up 44.7p, or 9.2%, to 529p as its second-quarter results beat expectations.

Revenues from its core marine services rose 4.2% to $198 million (£121 million) in the three months to the end of June and total maritime revenues skipped up 13% in the first half of the year.

The company’s second-quarter earnings slipped to $329 (£211 million) from $359 million (£230 million) in the same period of 2011, though the figures beat analyst expectations of $310 million (£199 million).

Analysts at Killik & Co held their target price of 484p on the stock and commented: ‘In the first half, Inmarsat Global MSS revenue grew by 1.4%, to $367m, with the return to growth driven by continuing strong subscriber take-up and the benefits of pricing initiatives.

‘The outlook statement provided in March continues to reflect the expectations for the performance of the group and its medium-term revenue targets remain unchanged.’

Poorly performing RBS and IAG top and tail rising FTSE

10.25: Are markets re-evaluating yesterday's steep falls? the FTSE 100 is up over 1% now at 5721, with stronger gains across Europe.

A combination of this afternoon's US non-farm payrolls figures and a re-assessment of the comments from European Central Bank president Mario Draghi yesterday, seem to be driving trading in thin August markets.

See our separate article here on how the reaction to Draghi's plans has morphed.

British Airways owner IAG expects full-year loss

09.01: Spain’s economic crisis, as well as high fuel prices, contributed towards IAG , the parent company of airlines British Airways, Iberia and bmi, reporting an operating loss for the half year of €253 million.

Though the group’s weak numbers were actually better than analysts had expected, IAG’s shares are down today – 4.3% lower to 152p – as the company warned that it no longer expects to break even this year. ‘In the light of the Spanish macro headwind, we now expect to make a small operating loss in 2012,’ the report says.

The restructuring of bmi, which IAG bought from Lufthansa earlier this year, accounted for most of €38 million of exceptional items, the group said. IAG is integrating bmi into British Airways but completed the sale of bmi regional in June, while bmibaby will be wound up later this year.

Willie Walsh, IAG chief executive, said in his statement that ‘we remain focused on stringent cost control across the group’.

He pointed to stark differences between IAG’s component parts: British Airways made an operating profit, but losses deepened at Iberia, the Spanish airline, which has ‘deep and structural’ problem.

‘We are currently working on a restructuring plan for Iberia… Inevitably, we will not be able to avoid job losses as part of this process.’

In response, Oriel Securities maintained its ‘buy’ recommendation for the shares: ‘The weakening Spanish macro economic situation is unhelpful for share price performance in our view at a time when weakening fuel prices should be contributing to positive earnings momentum, however we contend that this is reflected in the low valuation,’ noted analyst Edward Stanford.

RBS suffers £1.5bn loss as mis-selling bill grows

08.12: Another set of financial numbers from a British bank, another tale of scandal and mis-selling.

Royal Bank of Scotland (RBS.L), the 83% state-owned bank, today reported a first-half loss of £1.5 billion.

The technological breakdown that left many customers furious in June – before the Libor scandal came along to distract them – has cost the group £125 million.

The bank made another provision of £135 million in the first half of the year to cover the mis-selling of Payment Protection Insurance claims, bringing the total charge to £1.3 billion.  

The bank also said it had put aside a further £50 million for customer redress regarding interest rate swaps, after the FSA highlighted ‘serious failings’ in the way products were sold.  

The bank is also embroiled in the Libor rate-rigging scandal, which has resulted in a £290 million fine for Barclays.

Hester said RBS is taking the investigation very seriously. 'The Libor situation is on our agenda and is a stark reminder of the damage that individual wrongdoing and inadequate systems and controls can have in terms of financial and reputational impact,' he said.

According to reports yesterday, government ministers are considering fully nationalising the bank. Shares are down 0.2% at 203p this morning, while the FTSE 100 is up 0.3% at 5,682.

Investors prepare for key US jobs data

07.49: After Mario Draghi, president of the European Central Bank, yesterday disappointed markets by not announcing any immediate plans to buy Spanish and Italian bonds, a new focus of attention rolls into sight for anxious investors: US jobs figures.

Closely watched US non-farm payrolls are expected to show an increase of 100,000 in July when they are published this afternoon, up from last month’s 80,000 increase. A weak figure will reinforce hopes that the US Federal Reserve will act to boost the world's largest economy.

A big number is needed to reverse the downbeat air that Draghi left markets with yesterday. European markets declined and Wall Street followed lower. The Dow Jones industrial average fell 92 points, or 0.71%, to 12,879. The S&P 500 Index dropped 10 points, or 0.74%, to 1,365. The Nasdaq Composite lost 10 points, or 0.36%, to 2,910.

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