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Firmer commods lift FTSE ahead of U.S. payrolls

Published 03/04/2011, 04:30 AM
Updated 03/04/2011, 04:32 AM

* FTSE 100 index up 0.6 percent

* Commodities lead gainers on hopes for U.S. jobs

* High expectations for results dent advertising giant WPP

LONDON, March 4 (Reuters) - A further recovery by commodity stocks helped pull Britain's leading share index higher in early trade on Friday, with investors hoping that the latest U.S. jobs data will show the economic recovery is on track.

By 0910 GMT, the FTSE 100 was up 36.69 points, or 0.6 percent, at 6,041.78, having rallied 1.5 percent on Thursday to end above the 6,000 for the first time since Feb. 21.

Heavyweight energy issues and miners led the blue-chip advance as recent worries over the impact of soaring oil prices on the economic recovery took a back seat to hopes that the U.S. jobs data will show a pickup in employment.

"It's all about the payrolls and Wall Street's advance overnight showed that investors are pretty upbeat on the employment picture across the Atlantic," said Mic Mills, head of electronic dealing at ETX Capital.

"Although, if there is any disappointment in the numbers, the market could quickly fall out of bed," Mills added.

Investors betting on a big gain in U.S. payrolls pushed Wall Street to its biggest one-day rally in three months on Thursday, aided by better-than-expected initial weekly jobless claims, with Asian equities markets also pushing higher on Friday.

The median estimate is for a gain of 185,000 U.S. jobs in February, according to economists polled by Reuters, although market sentiment was leaning toward a number above 200,000.

OUTSOURCING REWARDS

Outsourcing firms were in demand on Friday, with Serco a strong blue-chip riser, up 2.8 percent, after recent results as traders cited the impact of an upgrade in rating by BofA Merrill Lynch to "buy" from "neutral".

Serco's blue-chip peer Capita gained 3.1 percent.

IMI was the biggest blue-chip riser, ahead 3.6 percent, having also claimed the top spot on Thursday following strong results, with positive broker comment on the engineering group.

On the downside, WPP Group was the biggest FTSE 100 faller, down 1.7 percent, as analysts cited disappointment that strong results from the world's largest advertising firm lagged those of French rival Publicis.

"Publicis shot the lights out with fourth-quarter organic growth of 12.5 percent, so there's relative disappointment," said Simon Baker, analyst at Credit Suisse.

Domestic data proved a bit of a dampener to sentiment.

British house prices fell 0.9 percent in February and by 2.8 percent in the three months to February compared with a year ago, their fastest annual pace in more than a year, mortgage lender Halifax said on Friday.

The Halifax survey contradicted that by fellow lender Nationwide on Tuesday which said prices climbed by a seasonally adjusted 0.3 percent month-on-month, defying economists' forecasts for a fall of 0.3 percent. (Editing by Erica Billingham)

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