By Carla Mozee, MarketWatch
LONDON (MarketWatch) — The U.K. pound fell but stocks climbed Friday following a stronger-than-expected jobs report from the U.S., a major trading partner for Europe.
The FTSE 100 /zigman2/quotes/210598409/delayed UK:UKX +0.76% rose almost 1% to end at 6,742.84, extending gains after the U.S. Labor Department said the economy added 321,000 jobs in November, the largest amount since early 2012. The Stoxx Europe 600 /zigman2/quotes/210599654/delayed XX:SXXP +0.88% stretched its advance to 1.8% after the jobs data.
For Europe, the stronger-than-expected jobs report “gives some hope that with slowing economic growth out of China, with Japan being back in a recession, with Europe generally being weak, the U.S. can move back to being a pretty strong engine for global economic growth,” said Michael Ball, founder of Colorado-based Weatherstone Capital Management, in a telephone interview. The firm has $850 million assets under management.
The U.S. dollar /zigman2/quotes/210598269/delayed DXY -0.05% rose against its rivals after the report, knocking the pound /zigman2/quotes/210561263/realtime/sampled GBPUSD -0.0158% back to buying $1.5601 compared with $1.5686 before the jobs data.
The addition of 200,000 or more jobs would have kept “the dollar well bid as it will confirm the market expectations of a Fed rate hike sometime in [the first quarter] of 2015,” said Boris Schlossberg, managing director of FX strategy, at BK Asset Management in a note earlier Friday.
The Bank of England, meanwhile, is likely to begin raising rates in the later months of 2015 as growth in the key eurozone market stagnates and domestic inflation levels lose steam. A survey released Friday by the Bank of England showed the British public have pushed down their expectations for an interest-rate hike over the next 12 months, and foresee the rate of inflation at 2.5% over the coming year, compared with expectations in August of a 2.8% rate.
Stocks: Only the mining and energy-related groups finished lower on the FTSE 100, continuing a painful run of losses as companies tackle issues ranging from oversupply, slowing demand and falling prices. Tullow Oil PLC /zigman2/quotes/205079109/delayed UK:TLW -4.01% fell 2.7% and miner Randgold Resources Ltd. fell 2.4%. Iron-ore heavyweight BHP Billiton PLC fell 1.3% and oil-services firm Petrofac Ltd. /zigman2/quotes/202340229/delayed UK:PFC +0.12% declined 1.3%, ending the week down 5.7%.
U.S. oil futures were crushed Friday, dropping toward five-year lows, while Brent crude was off by more than 3% for the week.
“With the drop that we’ve had in oil prices, energy is something that’s become more attractive to us ... we’ve selectively been adding to that area,” said Ball. His primary holding for the space is the Energy Select Sector SPDR /zigman2/quotes/206420077/composite XLE +3.19% , which tracks the performance of all energy stocks in the S&P 500 index. When oil prices slumped in 2008, dividend growth in the sector fell from double-digits to single-digit, but growth later resumed an upward trend, he noted. Ball expects a similar trend to play out amid the current round of crude-oil price declines.
As oil prices fell, shares of British Airways’ parent International Consolidated Airlines PLC /zigman2/quotes/208070069/delayed UK:IAG +2.02% shot to the top of the FTSE 100 as they rallied 4.8%.
Shares of aerospace equipment maker Meggitt PLC /zigman2/quotes/208933633/delayed UK:MGGT -0.16% rose 3.8%, boosted by an upgrade to a buy rating at Investec.
The FTSE 100 finished the week higher by 0.3%.
On the FTSE 250 index /zigman2/quotes/210598417/delayed UK:MCX +1.15% , Balfour Beatty PLC /zigman2/quotes/202863772/delayed UK:BBY +0.69% shares jumped 5.9% after the construction-services company turned down a 1 billion pound ($1.57 billion) bid from John Laing Infrastructure Fund for its public-private portfolio.