FTSE treads water ahead of key US non-farm payroll data

BRITAIN’S top share index closed a touch higher yesterday after a lacklustre day of trading following a powerful advance the day before, with investors keeping their powder dry ahead of US jobs data.

Autonomy was among the top blue-chip risers, up 5.2 per cent with traders citing press reports that the software company could find itself at the centre of a takeover battle between Microsoft and Oracle.

The FTSE 100 closed up 4.63 points or 0.1 per cent at 5,371.04 in low volume, with the index trading 73 per cent of its 90-day average.

The index closed up 2.7 per cent at 5,366.41 on Wednesday, its strongest daily performance in almost a month, buoyed by encouraging manufacturing data from the US and China, along with M&A speculation.

“It was always going to be a slightly subdued day after the very strong rise that we had yesterday,” Jim Wood-Smith, head of research at Williams de Broe, said.

“To an extent today is the phoney war before we get to the real action on Friday, when we get the US non-farm payrolls,” he said.

Data from across the Atlantic yesterday showed pending sales of previously owned US homes rebounded unexpectedly in July and new claims for jobless benefits fell last week.

Among other blue chip risers, defence contractor BAE Systems climbed 3.7 per cent after the firm received a $629m contract to upgrade 1,700 Caiman MRAP vehicles.

On the downside, miners which had been among the best performers on Wednesday retreated.

Lonmin and African Barrick Gold fell 1.9 and one per cent respectively as Citigroup cut both their ratings to “hold” from “buy”, arguing precious commodities are set for a subdued second half of 2010.

Hochschild Mining shed 2.5 per cent as the same broker downgraded its rating to “sell” from “hold”.

UK Chipmaker ARM Holdings was a big faller, down 3.8 per cent, with JPMorgan Cazenove arguing that US peer Intel’s purchase of Infineon’s wireless unit is neutral rather than positive for ARM.

Testing equipment firm Intertek Group dropped 0.7 per cent, with traders citing a Morgan Stanley note in which the broker cut its rating to “underweight” from “equal-weight”.

Telecoms firm Cable & Wireless Worldwide and satellite business Inmarsat fell three and 2.4 per cent, respectively, paring the previous session’s gains, having been linked with M&A whispers on Wednesday.

“It’s worth pointing out that the fact that we haven’t seen a flood of opportunistic profit-
taking after yesterday’s big move higher ... shows a degree of confidence,” Ben Critchley, sales trader at IG Index, said.

He said: “Eurozone retail sales figures may also have the potential to add some fresh direction early in tomorrow’s session, but apart from that it’s going to be all eyes on the labour situation across the Atlantic. Earnings news is set to be thin and the risk that gains could yet be eroded cannot be discounted either.”