London midday: Stocks gain ahead of US non-farm payrolls

UK equities gained on Friday ahead of the all-important US non-farm payrolls report as oil prices rose.

Oil prices edged higher even as OPEC failed to agree on output levels at Thursday’s meeting in Vienna, after government data showed a drop in US weekly crude inventories.

The Energy Information Agency on Thursday said US crude inventories fell by 1.4m barrels in the week ended May 27 to 535.7m barrels, soothing concerns about the global supply glut.

At 1134 BST Brent crude increased 0.21% to $50.15 per barrel and West Texas Intermediate rose 0.16% to $49.25 per barrel.

The US non-farm payrolls report at 1330 BST is expected to show US employers added 160,000 jobs in May, the same as the previous month, while the unemployment rate is forecast to fall to 4.9% from 5.0%.

Average hourly earnings are forecast to have risen 2.5% year-on-year in May, in line with April’s growth. On the month earnings are projected to increase 0.2% in May, slowing from a 0.3% in April.

The Fed is monitoring the health of the labour market as it determines the timing of its next interest rate hike.

"There is clearly a desire within the Fed to raise interest rates again over the summer, given how hawkish the commentary has been in recent months but they have repeatedly stressed that the data must perform in line with expectations," said Craig Erlam, senior market analyst at Oanda.

"The economic data has improved considerably recently, from retail sales and personal spending figures to the inflation data, but I think policy makers would like to see at least one more strong jobs report before they take the plunge."

Back on this side of the pond, data showed UK services growth picked up in May but remained subdued. The Markit/CIPS services purchasing managers’ index rose to 53.5 from April’s 38-month low of 52.3, beating expectations for a reading of 52.5.

A reading above 50 signals an expansion in the sector while a level below that suggests a contraction

The Caixin China services PMI fell to 51.2 in May from 51.8 in April.

The eurozone services PMI for May was unexpectedly revised higher to 53.3 from 53.1.

Eurozone retail sales were stable in April compared to a month ago, missing forecasts for a 0.4% increase, Eurostat said. On the year sales grew 1.4% in April, below estimates for a 2.1% gain.

Still to come, US services PMI at 1445 BST, ISM’s non-manufacturing composite at 1500 BST and US factory orders at 1500 BST.

On the company front, oil producers rallied on the surge in crude prices with BHP Billiton, BP, Royal Dutch Shell and Tullow Oil in the black.

BP has settled a lawsuit arising from the 2010 Deepwater Horizon oil spill by agreeing to pay investors who bought American Depository Shares $175m.

Housebuilders were in the red, including Barratt Developments, Persimmon and Taylor Wimpey, amid worries about a possible Brexit ahead of the European Union referendum on 23 June.

PZ Cussons dropped after Canaccord Genuity cut the stock to ‘hold’ from ‘buy’, keeping the price target at 345p as it recommended taking profits ahead of the full-year update.

ICAP gained after the markets operator and provider of post-trade risk mitigation and information services announced that China Foreign Exchange Trade System has chosen it to deliver the underlying technology for fixed income and foreign exchange electronic execution services in mainland China.

Market Movers

FTSE 100 (UKX) 6,246.64 0.99%
FTSE 250 (MCX) 17,145.05 0.40%
techMARK (TASX) 3,153.29 0.90%

FTSE 100 - Risers

Merlin Entertainments (MERL) 432.40p 3.12%
BP (BP.) 362.00p 2.52%
Rolls-Royce Holdings (RR.) 621.50p 2.39%
Fresnillo (FRES) 1,068.00p 2.30%
Glencore (GLEN) 131.40p 2.22%
InterContinental Hotels Group (IHG) 2,694.00p 2.12%
GlaxoSmithKline (GSK) 1,473.50p 2.01%
Associated British Foods (ABF) 2,955.00p 1.90%
HSBC Holdings (HSBA) 454.40p 1.85%
BHP Billiton (BLT) 820.40p 1.84%

FTSE 100 - Fallers

Barratt Developments (BDEV) 577.50p -1.28%
Taylor Wimpey (TW.) 190.40p -1.04%
Johnson Matthey (JMAT) 2,971.00p -0.80%
Persimmon (PSN) 2,061.00p -0.53%
WPP (WPP) 1,589.00p -0.50%
Sainsbury (J) (SBRY) 255.70p -0.47%
International Consolidated Airlines Group SA (CDI) (IAG) 530.50p -0.28%
Next (NXT) 5,375.00p -0.19%
Kingfisher (KGF) 364.60p -0.14%
Pearson (PSON) 848.50p -0.12%

FTSE 250 - Risers

Supergroup (SGP) 1,479.00p 3.43%
Tullow Oil (TLW) 238.40p 3.34%
Serco Group (SRP) 110.00p 2.90%
ICAP (IAP) 426.50p 2.62%
Man Group (EMG) 135.70p 2.49%
Cobham (COB) 140.20p 2.34%
Acacia Mining (ACA) 314.00p 2.25%
Allied Minds (ALM) 345.00p 2.19%
Restaurant Group (RTN) 361.90p 2.06%
PayPoint (PAY) 976.50p 1.93%

FTSE 250 - Fallers

Dechra Pharmaceuticals (DPH) 1,135.00p -3.65%
PZ Cussons (PZC) 331.10p -2.76%
CLS Holdings (CLI) 1,565.00p -2.19%
Greggs (GRG) 1,101.00p -2.05%
JRP Group (JRP) 143.40p -1.92%
Halfords Group (HFD) 406.40p -1.91%
Ocado Group (OCDO) 272.40p -1.84%
Interserve (IRV) 330.70p -1.52%
Ibstock (IBST) 197.20p -1.40%
Genesis Emerging Markets Fund Ltd Ptg NPV (GSS) 483.30p -1.37%