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European markets surge in wake of lower-than-expected US jobs data

Published 02/09/2016

The FTSE 100 was up 148.63 points to 6,894.6
The FTSE 100 was up 148.63 points to 6,894.6

European markets raced ahead after American jobs data came in shy of expectations, knocking back the chances of an interest rate hike from the US Federal Reserve.

The FTSE 100 Index rebounded from a four-week low on Thursday to trade up 148.63 points to 6,894.6, as the US employment update weighed on the dollar and boosted the prospects for London-listed commodity stocks.

A fall in the greenback makes commodities priced in dollars cheaper, lifting their demand.

Oil majors Royal Dutch Shell B and BP picked up 53p to 1953p and 12.3p to 431p respectively.

The mining giants were also pushing higher, with Fresnillo climbing 49p to 1668p, Randgold Resources lifting 215p to 7465p and Anglo American rising 19.3p to 808p.

The price of oil also rose 3.2% to 46.88 US dollars a barrel as the weakening dollar made commodities more affordable.

However, it was healthcare giant Hikma Pharmaceuticals which was in the ascendency on the London market , up 107p to 2185p.

Across Europe, the Cac 40 in France soared 2.3% and Germany's Dax closed up 1.4%.

The jump comes after US non-farm payrolls figures showed 151,000 additional jobs were added to the market last month, missing consensus estimates for a 180,000 rise.

The lower-than-expected amount has muted expectations for an interest rate hike when the central bank's Federal Open Market Committee delivers its next interest rate decision on September 21.

Fed chairman Janet Yellen last month signalled that US interest rates could rise following a strong performance from the world's largest economy.

On the currency markets, the pound broke through the 1.33 US dollars mark following the jobs update, before paring gains to a 0.1% rise to 1.329 US dollars.

Sterling was also up 0.4% against the euro at 1.191 euro after a purchasing managers' index report pointed to signs of recovery in Britain's construction industry, as output beat expectations and picked up from July's seven-year low.

The closely-watched Markit/CIPS construction PMI hit 49.2 in August, up from 45.9 in July and above economists' expectations of 46.5. A reading above 50 indicates growth.

In UK stocks, Go-Ahead Group, which jointly operates the troubled Southern rail franchise, saw its share price rocket after it saw full-year profits soar 27% to £99.8 million, while revenues rose 4.5% to £3.4 billion.

However, the FTSE 250 firm's chief executive, David Brown, turned down the opportunity to be considered for an annual bonus and declined a salary increase in light of months of delays and cancellations on the Southern service.

Shares were up more than 10% or 208p to 2,206p.

Elsewhere on the second tier, r etirement housebuilder McCarthy & Stone slumped as it revealed that it may miss its growth target after seeing "some weakness" in the secondary housing market since the Brexit vote.

The firm saw shares tank 11% or 24.5p to 185p after it said cancellations had increased and website inquires and new reservations were coming in at a lower level in comparison to the first nine months of the financial year.

It added that the drop could affect its ability to hit its 15% volume growth target.

The biggest risers on the FTSE 100 Index were Hikma Pharmaceuticals up 107p to 2185p, Imperial Brands up 167.5p to 4130p, Old Mutual up 7.8p to 200p, Unilever up 135.5p to 3663p.

The biggest fallers were Carnival down 151p to 3515p, Berkeley Group down 26p to 2,749p, Land Securities down 10p to 1098p, British Land Company down 6p to 667.5p.

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