7th Feb 2014 10:48
LONDON (Alliance News) - The UK's main stock indices are modestly higher Friday, holding on to small morning gains but losing Thursday's momentum amid mixed UK economic data and ahead of the key US jobs report still to come this afternoon.
By mid-morning Friday, the FTSE 100 is up 0.2% at 6,571.68, the FTSE 250 is up 0.3% at 15,838.57, and the AIM All-Share is up 0.3% at 860.68.
UK industrial production growth slowed in December, according to the latest Office of National Statistics data. Industrial production rose by 1.8% year-on-year in December, slowing from the 2.1% growth in November and short of economists forecasts of 2.3% growth. On a monthly basis, production rose by 0.4% in December, up from no growth seen in November but slower than the 0.6% expected.
Manufacturing production growth also was lower than expected, recording 1.5% year-on-year in December, slowing from 2.3% in November and missing the 2.3% growth that had been expected.
The pound has a negative reaction to the numbers, falling to a low against the dollar Friday morning of USD1.6299. Sterling quickly recovered, however, and is now higher against the dollar, trading at USD1.6335, as UK trade balance numbers released at the same time showed the deficit narrowing.
The UK's trade balance deficit recorded an impressive fall to GBP1.026 billion in December, from GBP3.582 billion in November.
The euro suffered a steep drop Friday morning amid reports that Germany's top court referred a complaint about the European Central Bank's bond-buying program to the European Constitutional Court. The Outright Monetary Program, announced by the ECB back in September 2012, allows the ECB to make unlimited sovereign bond purchases to support struggling eurozone economies.
The OMP has been widely credited with stabilising the euro in a time of crisis, so although it has not yet been needed, the fact that there are questions over its legality, and the fact that Germany doesn't feel it can make a decision on its own, sent the single currency to a daily low against the dollar at USD1.3550. Almost immediately after, the ECB put out a statement reaffirming that it does believe the OMP is constitutional, sending the euro back up slightly to USD1.3575, where it continues to trade.
Major European equity markets are quiet, with the CAC 40 flat and the DAX 30 up 0.3%.
A quiet morning in the UK corporate calendar has led to few stand-out stock movers. Biopharmaceutical company Shire is down 0.8% after it said it would abandon clinical development of Vyvanse for the potential treatment of major depressive disorder after it failed late-stage trials.
In the FTSE 250, Vedanta Resources leads the gains, up 5.1% after the company said that Executive Chairman Anil Agarwal recently bought over 1.1 million shares in the company for a total of over GBP9.0 million. The miner and oil and gas producer has also been raised to Buy by Merrill Lynch.
Still to come Friday, Germany industrial production numbers at 1100 GMT, where the expectation is for a monthly slowdown in growth to 0.5% in December from 1.9% in November.
Short of any big shock, markets are likely to remain fairly quiet in the lead up to the US non-farm payroll jobs report at 1330 GMT. The expectation is for a 185,000 increase in jobs in January, after the unexpectedly weak 74,000 added in December.
However, given Thursday's decent initial jobless claims print and the rally seen in stocks since, there may be some disappointment if the number doesn't come in even stronger. The headline rate of US unemployment of expected to be unchanged at 6.7%.
"We expect a general sideways move as we await the US non-farms data, which is likely to be the catalyst we need to get a handle on where we go from here," said CMC Markets senior sales trader Nick Dale-Lace.
By Jon Darby; [email protected]; @jondarby100
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