U.K. stocks were little changed, erasing earlier losses, after a report showed U.S. payrolls increased in October more than forecast.
International Consolidated Airlines Group SA jumped 8 percent after raising its full-year profit forecast. Rolls-Royce Holdings Plc added 3.4 percent after lifting the profit outlook for its aerospace defense unit. Aberdeen Asset Management Plc and Schroders Plc dropped at least 2 percent each, following European financial-services peers lower.
The FTSE 100 rose 11.2 points, or 0.2 percent, to 6,708.42 at the close of trading in London, after earlier losing as much as 0.7 percent. The index trimmed its weekly decline to 0.4 percent. It climbed 4.2 percent in October as U.S. lawmakers agreed to extend the country’s borrowing authority and the Fed maintained stimulus measures. The FTSE All-Share Index gained 0.1 percent today, and Ireland’s ISEQ Index added 0.2 percent.
“We seem to have returned to some form of market normality where a very positive piece of macro data, in this case a better than expected non-farm payrolls number, has led to the markets being better bid,” Alex Young, sales trader at CMC Markets U.K. in London, said in e-mailed comments.
U.S. payrolls increased in October more than forecast, Labor Department figures showed today. The addition of 204,000 workers last month followed a revised 163,000 gain in September. The median forecast of 91 economists surveyed by Bloomberg called for a 120,000 advance. The unemployment rate rose to 7.3 percent from an almost five-year low.
“The initial reaction was typically volatile as the market took the good news as a signal to aggressively sell with expectations that this may be the indicator that forces the Fed’s hand into switching the liquidity tap off,” Young said. “The sell-off was short lived, however, as sense prevailed with the realization that good news may very well be just that, as the market now genuinely believes that even without the Fed’s help we may very well be out of the woods.”
Data yesterday showed the world’s biggest economy expanded at a faster-than-estimated pace in the third quarter. The Fed last week said it needs to see more evidence of sustained economic improvement before slowing the pace of its $85 billion monthly bond purchases.
A Bloomberg News survey last month showed economists expected quantitative easing to continue for several months. The Fed won’t begin tapering bond buying until March and will continue its purchases until October, according to the median estimate of 40 analysts in that poll.
Standard & Poor’s lowered France’s long-term foreign and local-currency credit rating one step to AA from AA+ today, with a stable outlook. The ratings company said slower growth will constrain the government’s ability to improve public finances.
The yield on France’s 10-year government bond expiring in 2023 increased 6.9 basis points to 2.22 percent. Since S&P’s first downgrade on Jan. 13, 2012, French government bonds returned more than 10 percent, according to the Bloomberg France Sovereign Bond Index.
IAG jumped 8 percent to 376.9 pence, its highest price in six years, after saying it expects full-year operating profit of about 740 million euros ($993 million), compared with a previous forecast that it would at least equal 2011’s 485 million euros. The British Airways parent said third-quarter operating profit before one-time items rose to 690 million euros from 270 million euros a year earlier.
Rolls-Royce advanced 3.4 percent to 1,210 pence after the world’s second-biggest maker of commercial jet engines said its defense aerospace subsidiary will see “modest growth” this year rather than “broadly flat” profit.
Merlin Entertainments Plc surged 10 percent to 347 pence on its first day of trading. The owner of Madame Tussauds, backed by Blackstone Group LP, CVC Capital Partners Ltd. and Kirkbi A/S, said it raised about 957 million pounds in the initial public offering. The amount could rise to 1.05 billion pounds including an over-allotment option, Merlin said.
Aberdeen Asset Management, Scotland’s biggest fund manager, slid 4.6 percent to 422.2 pence and Schroders, the U.K.’s largest publicly-traded money manager, declined 2.1 percent to 2,438 pence. A gauge of financial-services companies posted the worst performance of 19 groups in the Stoxx Europe 600 Index.