US jobs data leads FTSE to a strong close

THE FTSE continued its strong start to 2011 as a late afternoon rally enabled it to stick at levels not seen since 2008.

The FTSE 100 closed 29.99 points or 0.5 per cent higher to close at 6,043.86, still ahead of the important 6,000 mark and far above levels seen in the recession.

Impressive US jobs data provided additional momentum in the afternoon. The ADP Employer Service report revealed that 297,000 jobs were added last month, compared with the forecasted 100,000. The numbers boosted sentiment ahead of official Department of Labour statistics published on Friday.

“Many are now hoping Friday's employment data can back this up and deliver the momentum the markets sorely need to push on,” said David Jones, chief market strategist at IG Index.

US chipmakers and tech firms also performed well, boosted by the imminent opening of the Consumer Electronics show in Las Vegas tomorrow. ARM (up 7.65 per cent to 471.4p) and CSR (up 7.82 per cent to 377.7p) respectively headed the lists of FTSE 100 and FTSE 250 risers.

Barclays and HSBC provided support for a second day, while Tullow Oil and Cairn Energy also boosted the index.

Mobile operator Vodafone gained 3.2 per cent after it bought back 13.2 million of its shares for an average price of 169.9p per share.

Womenswear retailer Next rose 4.37 per cent to 103.0p after announcing that it remains on track, despite losing about £22m in Christmas sales thanks to the snow.

“The fall was in line with market expectations and mostly shareholders have cheered the news as they had feared that the severe pre-Christmas weather conditions may have resulted in a more dire sales drive,” said Joshua Raymond, a market strategist at City Index.

But analysts are still focusing on weaker retailers and HMV fell 20 per cent to 26p after warning it may miss bank covenants after further poor sales in December.

Mining stocks also weighed on the index, said Jones. “Miners dragged the FTSE lower as they bore the brunt of investor profit-taking following disappointing data in Europe, with sector heavyweights Antofagasta (-2.22 per cent), Anglo American (-1.72 per cent) and Kazakhmys (-1.52 per cent) all down,” he said.

Overall, the FTSE outperformed other European indices, though. “The DAX and CAC both traded around 0.8 per cent lower, weighed by the fall in commodities and miners,” said Raymond.

In New York, stocks rallied on the positive jobs data as well as further good news about factory outputs and from the Institute for Supply Management’s non-manufacturing index.

US stocks traded at about a two-year high, with financials, housing stocks and airlines performing strongly, countered by utilities stocks such as American Electric and Duke Energy, which suffered after being downgraded by analysts.

The Nasdaq Composite Index gained 20.95 points, or 0.78 per cent, to close at 2,702.2; the S&P 500 rose 6.37 points, or 0.5 per cent, to close at 1,276.57; and the Dow Jones industrial average advanced 31.87 points, or 0.27 per cent, to close at 11,723.05.