LONDON (ShareCast) - (Sharecast News) - London stocks ended higher on Thursday, buoyed by a stabilisation in sterling after recent turbulence, as attention turned to a stronger-than-expected US payrolls report.
The FTSE 100 index rose 0.55% to close at 8,823.20 points, while the FTSE 250 climbed 1.17% to 21,702.58 points.

In currency markets, sterling was last up 0.09% on the dollar to trade at $1.3648, while it advanced 0.48% against the euro, changing hands at €1.1612.

"UK gilts are firming up this morning along with the pound as the PM gives his chancellor much more vigorous backing following a tricky session on Wednesday," said Neil Wilson, UK investor strategist at Saxo Markets.

"Gilt yields had spiked sharply and sterling retreated as bond markets interpreted a visibly upset Rachel Reeves during PMQs as a sign that her days as Chancellor were numbered.

"It was an unusual situation, but it looked like the bond market had her back in a way - it didn't like the way the PM did not give her his full backing during PMQs."

Wilson said it may have been an overreaction, noting that Starmer may not have been "quick enough on his feet" to realise the implication.

"Who really knows what is going on? What I can say is the calculation was that she's probably the most market-friendly chancellor Labour could field, so replacing her indicated a higher chance of changing fiscal rules, implying more debt and instability.

"But there is a deeper problem for the government here even if she stays - the market is getting nervous about its ability to make the sums add up whether she is 'market-friendly' or not - and the economic outlook is hardly improving."

US payrolls come in well above expectations, UK services sector gains momentum

In economic news, non-farm payrolls in the US rose by 147,000 in June, according to the Bureau of Labor Statistics.

The figure exceeded expectations of 110,000 and was broadly in line with the 12-month average of 146,000.

Notable job gains were seen in healthcare and government, despite a modest drop in federal employment.

The unemployment rate unexpectedly fell to 4.1%, defying forecasts for a rise to 4.3%, reinforcing confidence in the underlying strength of the US labour market.

US services sector activity also edged back into expansion territory in June, with the ISM services purchasing managers' index (PMI) rising to 50.8 from May's contractionary 49.9.

While uncertainty around US trade tariffs continued to weigh on sentiment, output and new orders picked up modestly.

However, the employment sub-index dipped to 47.2, signalling softer labour demand in the services industry.

On home shores, the UK services sector gained momentum in June, with the S&P Global services PMI climbing to 52.8, the strongest reading since August and an improvement on both May's 50.9 and the initial estimate of 51.3.

The composite PMI, which includes manufacturing and services, rose to 52.0.

Survey respondents cited easing cost pressures and a recovery in business and consumer demand, though they continued to flag concerns over domestic economic conditions and geopolitical uncertainty.

Tim Moore, economics director at S&P Global Market Intelligence, said the sector's "modest" rebound had been "fuelled by a turnaround in domestic business and consumer spending after a soft patch during the spring".

"While total new work picked up, shrinking export sales were a constraint on growth," he continued.

"Meanwhile, concerns about elevated payroll costs meant that service providers were reluctant to turn on the hiring taps."

Meanwhile, China's services sector lost pace, with the Caixin services PMI slipping to 50.6 in June from 51.1 in May, falling short of expectations.

The reading marked a nine-month low, reflecting subdued new business and continued weakness in export demand.

Close Brothers jumps, Baltic Classifieds slumps after results

On London's equity markets, Close Brothers Group jumped 7.47% amid investor optimism that a forthcoming Supreme Court decision on motor finance could be less damaging than feared.

"It could be related to optimism over the imminent motor finance ruling by the Supreme Court," Neil Wilson said.

"There is a growing sense/hope that a very unfavourable outcome for lenders is unlikely and stocks are already well priced for the decision."

Banks also advanced, with Lloyds up 3.18%, NatWest rising 2.02% and Barclays gaining 2.03%, buoyed by easing bond market volatility and firming expectations around interest rates.

"After yesterday's political chaos around the future of Rachel Reeves as Chancellor triggered a spike in UK government bond yields, prime minister Keir Starmer has now brought a sense of calm to markets," noted Dan Coatsworth, investment analyst at AJ Bell.

"Starmer declaring his support for the Chancellor has led to gilt yields pulling back and sterling rebounding after yesterday's slump against the dollar.

"The initial sell-off in gilts and the pound was the market's way of saying it was losing faith in the economic outlook and political stability."

Elsewhere, housebuilder Berkeley Group climbed 2.06%, rebounding after losses in the previous session.

Currys surged 7.09% after reinstating its dividend and posting a rise in annual sales and profits.

The retailer reported group revenue of £8.7bn for the year to 3 May, up 3% overall and 2% on a like-for-like basis, with strong UK and Ireland performance offsetting flat Nordic sales.

Great Portland Estates added 2.31% following a positive first-quarter trading update.

On the downside, Baltic Classifieds slumped 8.35% after releasing full-year results that disappointed investors.

Watches of Switzerland dropped 6.98% despite record revenue, as the company posted a decline in annual profits and warned of margin pressures from rising US tariffs.

Miners also retreated, with Rio Tinto down 0.98% and Anglo American falling 1.21%, giving back gains made earlier in the week alongside copper prices.

Reporting by Josh White for Sharecast.com.

Market Movers

FTSE 100 (UKX) 8,823.20 0.55%
FTSE 250 (MCX) 21,702.58 1.17%
techMARK (TASX) 5,098.28 0.73%

FTSE 100 - Risers

Coca-Cola HBC AG (CDI) (CCH) 3,964.00p 3.93%
NATWEST GROUP (NWG) 489.00p 3.21%
Lloyds Banking Group (LLOY) 75.88p 3.18%
Convatec Group (CTEC) 265.40p 3.11%
Pershing Square Holdings Ltd NPV (PSH) 4,114.00p 3.05%
SSE (SSE) 1,865.50p 2.75%
Next (NXT) 12,320.00p 2.75%
Airtel Africa (AAF) 182.10p 2.42%
Tesco (TSCO) 405.10p 2.32%
Schroders (SDR) 371.00p 2.20%

FTSE 100 - Fallers

Rio Tinto (RIO) 4,296.00p -1.94%
AstraZeneca (AZN) 10,204.00p -1.79%
Melrose Industries (MRO) 524.80p -1.17%
GSK (GSK) 1,394.00p -1.10%
Anglo American (AAL) 2,244.00p -0.86%
Entain (ENT) 916.40p -0.50%
Mondi (MNDI) 1,227.50p -0.45%
Diageo (DGE) 1,912.00p -0.42%
Compass Group (CPG) 2,504.00p -0.40%
London Stock Exchange Group (LSEG) 10,785.00p -0.19%

FTSE 250 - Risers

Genus (GNS) 2,155.00p 7.86%
Close Brothers Group (CBG) 398.40p 7.10%
Currys (CURY) 126.90p 7.09%
TBC Bank Group (TBCG) 4,830.00p 5.34%
Bodycote (BOY) 615.50p 4.77%
Oxford Nanopore Technologies (ONT) 148.00p 4.01%
Just Group (JUST) 133.40p 3.89%
XPS Pensions Group (XPS) 369.00p 3.80%
CMC Markets (CMCX) 257.00p 3.63%
Discoverie Group (DSCV) 686.00p 3.61%

FTSE 250 - Fallers

Baltic Classifieds Group (BCG) 324.00p -8.35%
Watches of Switzerland Group (WOSG) 388.00p -7.97%
Workspace Group (WKP) 391.50p -4.04%
FirstGroup (FGP) 220.60p -3.25%
Keller Group (KLR) 1,404.00p -2.09%
JPMorgan European Discovery Trust (JEDT) 565.00p -1.40%
Big Yellow Group (BYG) 952.00p -1.35%
Hill and Smith (HILS) 1,806.00p -0.99%
Primary Health Properties (PHP) 96.80p -0.97%
Savills (SVS) 972.00p -0.92%

Email this article to a friend

or share it with one of these popular networks:

• DIGG
• FACEBOOK
• STUMBLEUPON
• MIXX
• YAHOO BUZZ
• DELICIOUS
• REDDIT
• NEWSVINE