FTSE mixed as investors wait for U.S. jobs data
03/02/2012 at 10:30
* U.S. unemployment seen static at 8.5 pct
* BT gains after Q3 update
* Admiral jumps as it extended its existing UK partnerships
By David Brett
LONDON Feb 3 Reuters - Defensive shares led Britain's FTSE 100 slightly higher on Friday as investors braced themselves for the latest set of jobs data out of the U.S., while miners lead the fallers as brokers cast doubt over the sustainability of recent gains.
London's blue chip index was up 2.88 points at 5,798.40 by 0904 GMT.
Traders said there were unlikely to be any drastic index movements until the U.S. nonfarm payrolls are released around 1330 GMT.
Forecasts are for a rise by around 150,000 after a 200,000 increase in December, with the unemployment rate seen static at 8.5 percent.
"Unpredictable seasonal adjustments point to a wide range of expectations, but if the figures improve on the 200,000 seen in December, that could be the catalyst for the FTSE 100 to break and hold above 5,800," Jimmy Yates, head of equities at CMC Markets, said.
"Less than 150,000 could see the FTSE 100 dip marginally, but there is support for riskier equities at the moment due to the liquidity boost provided by central banks," he said.
Barclays Capital said the short-term rally should continue as financial conditions continue to improve -- driven by the second long term refinancing operation LTRO at the end of February, a 50 basis point European Central Bank rate cut in March, renewed euro weakening and tighter peripheral sovereign spreads -- but longer-term risks prevail.
BarCap said it is positioning itself for the longer term by gradually reducing exposure to financials, and it downgraded financial services to "market weight", given the recent uninspiring fund flow data.
It upgraded autos to "market weight" to play the strength of the Chinese consumer.
Banks were steady on Friday, having risen 15 percent in 2012, compared to a 4 percent gain on the FTSE 100, on the back of the liquidity boost provided by the LTRO, which has reduced default risk.
Investors netted profits in miners , which rose sharply on Thursday as talks over a potential merger between Xstrata and Glencore ignited the prospect for further M&A in the sector.
As money has been ploughed into cheaper riskier assets early in 2012, funds have flowed out of defensives, but with cyclicals waning on Friday the likes of the drugmakers and tobacco firms featured prominently on the upside.
Imperial Tobacco was up 1.5 percent, while Shire
rose 0.9 percent, although volumes were painfully thin, highlighting investors unwillingness to get involved in these uncertain markets.
Insurer Admiral Group was the standout gainer, up 6.9 percent as the firm said it has extended its existing UK car insurance reinsurance partnerships until 2014, with the cost of its arrangements unchanged. Admiral's shares fell by more than a quarter on Nov. 9, after the firm issued a profit warning.
"This morning's announcement, while not hugely significant, does highlight the continuing support that Admiral enjoys from its re-insurance partners," said Peel Hunt analyst Mark Williamson in a note repeating its "buy" rating on Admiral.
Telecoms provider BT gained 1.8 percent after lower regulatory charges, cost cuts and strong demand for a wide range of services enabled it to post solid third-quarter core earnings and lift aspects of its forecasts.
Editing by Hans-Juergen Peters
david.brett@thomsonreuters.com020 7542 8099Reuters Messaging: Reuters Messaging: david.brett.thomsonreuters.com@reuters.net
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