London midday: Investors cautious ahead of US jobs report

Investors remained on the sidelines come midday ahead of what some analysts believed would be a make-or-break jobs report for market expectations of a rate hike by the US central bank in December.

Ahead of those numbers, as of 1214 GMT the FTSE 100 was retreating by 6.26 points to 6,349.94.

Societe Generale said the US employment report will be critical in shaping market expectations for the December FOMC meeting.

“The average non-farm payroll gain in the previous six reports was 199,000, and in the past twelve reports was 229,000. The current consensus expectation for the October non-farm payrolls is 180,000 with the unemployment rate at 5.1%.

"A report with a headline number around 200k is likely to raise market pricing of a December rate hike, and pave the way to a further dollar advance," the French investment bank said.

December rate hike still a 'close call'

On Thursday evening, the president of the Federal Reserve Bank of Atlanta, Dennis Lockhart, said 'lift-off' in December "remains a close call".

"I expect to see a subsiding of the risks that appropriately led, in my opinion, to a policy hold in September and October and so I think the case for liftoff will continue to firm up [...] revisions in my forecast of how quickly remaining output and inflation-target gaps might close could quite easily point to a longer period for a zero funds rate."

In an interview with Bloomberg TV, Francisco Garzarelli, head of Macro and Markets at Goldman Sachs, framed the debate in terms of a robust domestic US economy alongside an American manufacturing sector in the doldrums the same as in the rest of the world.

Garzarelli - who stuck to his call for a December hike - said Friday´s jobs report would have to be "very bad" for the central bank to hold its fire.

UK industrial production edged past forecasts in September, rising by 0.8% month-on-month (consensus: 0.60%).

Speaking to the BBC Radio, Bank of England Deputy Governor Minouche Shafik said "we are over time seeing a situation where there are recruitment difficulties in many parts of the country, employers are having to bid up wages."

"I do think that the labour market will start to tighten over the coming months."

September data on UK industrial production and visible trades is due at 0930 GMT.

Icap snaps up rival

Interdealer broker Tullett Prebon confirmed it was in discussions regarding the possible acquisition of rival ICAP’s global broking business. Shares in both companies surged following the announcement.Stock in in Tullett Prebon had tumbled almost 10% early on Friday.

UBS reviewed its European equity strategy, sounding an upbeat note about the prospects for 2016 and 2017. The Swiss broker upgraded the construction sector to ‘overweight’ from ‘neutral’ saying it should benefit from a pick-up in economic growth and is the second-most operationally geared sector. It noted a preference for CRH and HeidelbergCement.

The bursting of a tailings dam at a mine part-owned by BHP Billiton in Brazil's Minais Gerais region is thought to have left at least 15 people dead and almost 50 missing in the resulting mudslides. The Germano iron ore mine is operated by Samarco Mineração, a joint venture of which BHP Billiton and Vale both own 50%.

International Airlines Group has upgraded its long term return and equity cash flow objectives. The FTSE 100 airline group released the update to its long-term planning goals for 2016 to 2020 on Friday ahead of its capital markets day. The company said it’s now targeting a return on invested capital in real terms of 15%, compared to 12% previously.

Shares in Burberry fell on the heels of a poorly received set of results out of its Swiss rival Richemont.

Pharmaceuticals giant AstraZeneca has agreed to buy California-based ZS Pharma for $2.7bn (£1.8bn) in cash. The Anglo-Swedish drug giant has agreed to pay $90 a share for ZS, which develops treatments for hyperkalaemia, a serious condition typically associated with chronic kidney diseases and chronic heart failure, as Astra said ZS represented a strong fit with its pipeline and portfolio in cardiovascular and metabolic disease.

TalkTalk said on Friday that the cyber attack it suffered in October was a lot smaller than it originally suspected. The telecommunications company said 4% of its customers have sensitive or personal data at risk. TalkTalk said a total of 156,959 customers’ bank details were accessed, of which 15,656 bank account numbers and sort codes were seen.

Inmarsat’s third quarter revenues have been given a large boost thanks to its new aviation division. The FTSE 100 satellite communications service provider posted its results for the three months to 30 September on Friday where total revenue for the quarter climbed 7.5% on 2014, driven by an $11.9m (£7.8m) increase in aviation revenues.

Market Movers

FTSE 100 (UKX) 6,349.94 -0.24%
FTSE 250 (MCX) 17,104.21 -0.08%
techMARK (TASX) 3,082.98 -0.21%

FTSE 100 - Risers

CRH (CRH) 1,868.00p 4.01%
International Consolidated Airlines Group SA (CDI) (IAG) 597.00p 2.84%
Inmarsat (ISAT) 994.50p 2.16%
BAE Systems (BA.) 444.70p 1.55%
Royal Mail (RMG) 444.40p 1.46%
Meggitt (MGGT) 385.20p 1.40%
InterContinental Hotels Group (IHG) 2,645.00p 1.26%
Smith & Nephew (SN.) 1,115.00p 1.18%
London Stock Exchange Group (LSE) 2,586.00p 1.02%
GKN (GKN) 293.50p 0.96%

FTSE 100 - Fallers

BHP Billiton (BLT) 977.20p -5.49%
Burberry Group (BRBY) 1,355.00p -2.17%
Glencore (GLEN) 118.95p -2.10%
Capita (CPI) 1,274.00p -1.70%
3i Group (III) 493.00p -1.50%
Pearson (PSON) 837.00p -1.24%
Reckitt Benckiser Group (RB.) 6,277.00p -1.15%
Hikma Pharmaceuticals (HIK) 2,025.00p -1.12%
AstraZeneca (AZN) 4,205.50p -0.98%
Anglo American (AAL) 529.60p -0.94%

FTSE 250 - Risers

ICAP (IAP) 477.80p 7.71%
Tullett Prebon (TLPR) 350.00p 6.45%
Man Group (EMG) 168.30p 2.94%
Centamin (DI) (CEY) 65.65p 2.82%
Jardine Lloyd Thompson Group (JLT) 871.00p 2.65%
TalkTalk Telecom Group (TALK) 226.70p 2.63%
Scottish Mortgage Inv Trust (SMT) 271.10p 2.26%
Aldermore Group (ALD) 263.40p 2.17%
esure Group (ESUR) 260.40p 2.16%
Virgin Money Holdings (UK) (VM.) 389.00p 1.81%

FTSE 250 - Fallers

Synthomer (SYNT) 319.10p -5.31%
Amec Foster Wheeler (AMFW) 548.00p -4.53%
Premier Oil (PMO) 77.00p -3.75%
Petrofac Ltd. (PFC) 770.00p -3.69%
Morgan Advanced Materials (MGAM) 269.60p -3.68%
Vedanta Resources (VED) 472.80p -2.84%
Aggreko (AGK) 926.00p -2.83%
Petra Diamonds Ltd.(DI) (PDL) 73.60p -2.77%
Acacia Mining (ACA) 173.20p -2.42%
Dairy Crest Group (DCG) 618.50p -2.37%