By Sara Sjolin, MarketWatch
U.K. stocks erased earlier losses and bounced higher in Friday afternoon action after the closely watched U.S. jobs report fueled optimism over the country’s labor market and sent the dollar higher against the pound.
Although the headline nonfarm-payrolls number disappointed at 156,000 in December, average wages rose much faster than expected. The labor-market participation rate also advanced, indicating more people are rejoining the labor force as the economy continues to improve.
“The overall jobs report can be considered a strong one with the all-important average earnings jumping from a negative reading last month of -0.1% to 0.4% this month,” said James Hughes, chief market analyst at GKFX, in a note.
“With more rate hikes on the horizon it becomes increasingly important for earnings to move in line with debt payments,” he added.
The Federal Reserve is expected to raise interest rates three times in 2017, which means debt payments will increase.
The report spurred a jump in the dollar /zigman2/quotes/210598269/delayed DXY -0.17% , in turn sending the pound /zigman2/quotes/210561263/realtime/sampled GBPUSD +0.4208% lower and boosting U.K. exporters. Sterling fell to $1.2312 from $1.2419 late Thursday in New York.
That pulled the FTSE 100 index /zigman2/quotes/210598409/delayed UK:UKX +0.52% out of the red to end 0.2% higher at 7,210.05, for a ninth straight win and a record close. The benchmark has now logged seven straight consecutive record closes, the longest streak since 1997.
For the holiday-shortened week, the FTSE rose 0.9%.
Bank cheer: Lloyds Banking Group PLC /zigman2/quotes/202285510/delayed UK:LLOY +1.52% rose 1.9% after Barclays lifted the lender to overweight from equal weight. Barclays said the U.K.’s economic prospects remain challenging, but are less severe than previously expected.
HSBC Holdings PLC /zigman2/quotes/203901799/delayed UK:HSBA +1.50% /zigman2/quotes/202687335/delayed HK:5 -0.99% /zigman2/quotes/208272822/composite HSBC +1.09% gained 1.1% and Barclays PLC /zigman2/quotes/208409333/delayed UK:BARC +2.46% /zigman2/quotes/206581728/composite BCS +2.24% picked up 1.2%.
Miners weigh: Gold miners topped the list of decliners in London as the metal gave up 0.6% to trade at around $1,174 an ounce. Shares of Fresnillo PLC /zigman2/quotes/201300065/delayed UK:FRES -0.22% fell 3.5% and Randgold Resources Ltd. /zigman2/quotes/201432642/composite GOLD +1.14% lost 2.8%.
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Other movers: Shares of easyJet PLC /zigman2/quotes/202825892/delayed UK:EZJ +0.55% climbed 0.4% after the budget airline said traffic went up 15.1% in December year-over-year.
TUI AG /zigman2/quotes/207049334/delayed UK:TUI +0.59% fell 0.5% after UBS cut the travel operator to neutral from buy.
On the FTSE 250 index /zigman2/quotes/210598417/delayed UK:MCX +0.22% , Rotork PLC /zigman2/quotes/200372942/delayed UK:ROR +1.01% jumped 4% after Goldman Sachs started coverage of the manufacturing company with a buy rating.