U.K. Stocks Rise as U.S. Payrolls Growth Trails EstimatesInyoung Hwang
U.K. stocks advanced as investors assessed the likelihood of the Federal Reserve tapering its bond purchases after a report showed the U.S. economy created fewer jobs last month than forecast.
Tullow Oil Plc added 3.6 percent after announcing that it has discovered oil off the coast of Norway. Lancashire Holdings Plc climbed 1.8 percent after shareholders approved its acquisition of Cathedral Capital Ltd.
The FTSE 100 Index advanced 14.89 points, or 0.2 percent, to 6,547.33 at the close in London. The equity benchmark rose 2.1 percent this week, for its best performance in almost two months. The broader FTSE All-Share gained 0.3 percent today, while Ireland’s ISEQ Index increased 0.2 percent.
“It reinforces the majority view that we’re going to get tapering this month,” Ian Williams, a market strategist at Peel Hunt LLP in London, said by telephone. “What we’re seeing in equity markets now is a move from a phase where it was all about what central bank policy makers were going to do to the implications of a broad-based improvement in the macro data.”
A Labor Department report showed that employers in the U.S. hired fewer people in August than economists had predicted. Payrolls climbed by 169,000 last month, falling short of the 180,000 median estimate in a Bloomberg survey of economists. The Fed holds a policy meeting on Sept. 17-18 to decide whether to slow the pace of its bond-buying program. Chairman Ben S. Bernanke has said that the central bank may taper its monthly purchases if the employment outlook improves substantially and the economy grows as forecast.
Yields on 10-year Treasuries retreated to 2.91 percent after reaching their highest level since July 2011 earlier today, according to Bloomberg Bond Trader data. German 10-year yields fell nine basis points to 1.95 percent, while gilt yields lost seven basis points to 2.94 percent.
U.K. industrial production was unchanged in July, falling short of the 0.2 percent increase predicted by economists in a Bloomberg survey. Factory output rose 0.2 percent in July, matching the median estimate of economists in a separate poll. Industrial production measures the output of utilities and mines as well as factories.
A separate release from Halifax showed house prices in the U.K. climbed for a seventh month in August and will probably increase through the rest of the year. Prices rose 0.4 percent from the previous month to an average of 170,231 pounds ($266,000), the mortgage unit of Lloyds Banking Group Plc said. From a year earlier, prices advanced 6.2 percent.
The FTSE 100 earlier fell as much as 0.6 percent after Vladimir Putin said that Russia will help Syria if the U.S. launches military strikes against the regime of Bashar al-Assad.
Tullow Oil added 3.6 percent to 1,070 pence. The explorer said that it has made the first discovery of oil in the Hoop-Maud Basin in the Barents Sea.
Lancashire increased 1.8 percent to 751 pence as the Bermuda-registered insurer said that investors voted more than 99 percent in favor of its purchase of Cathedral.
Credit Suisse Group AG upgraded the company, which has its head office in London, to outperform from neutral, meaning that investors should hold more of the shares than are represented in benchmark indexes.
Fresnillo Plc and Randgold Resources Ltd., which mine precious metals, retreated 1.3 percent to 1,264 pence and 1.3 percent to 4,989 pence, respectively.