FTSE preview: Shares firm ahead of US jobs

By Reuters
Updated: 03:03 EDT, 3 June 2011

The FTSE 100 is expected to hold steady after a sharp sell-off in the previous two sessions following mixed showings overnight on Wall street and in Asia.

Friday feeling: Traders will watch US jobs data.

Investors are likely to stay cautious, however, ahead of the latest US jobs report, another important pointer to the health of the global economy.

US non-farm payrolls are forecast to have increased by 150,000 in May, with the consensus estimate having been cut from an 180,000 increase on Wednesday following an ADP report showing a sharper than expected slowdown in private jobs growth last month.

After the jobs report is out of the way, May's US ISM non-manufacturing index will be released, with the manufacturing ISM data also disappointing earlier this week.

The only British data scheduled for Friday is the Markit/CIPS services PMI report.

The UK blue chip index closed down 80.69 points, or 1.4% on Thursday at 5,847.92, having dropped 1% in the previous session, as worries over recent weak economic data drove investors from risky assets.

US stocks ended a volatile trading day mostly flat on Thursday as investors were reluctant to make bets a day before the key labor market report, and Asian stocks were steadier on Friday after recent sharp falls.

Heavyweight mining stocks could provide a prop for UK blue chips gains on Friday after LME copper rose in Asian trade as base metals rebounded from overnight losses as investors rebuilt some of their shattered confidence.

Technical analysis backed up expectations for a modest rally by the FTSE 100 index.

'Although the main trend is clearly down, the index appears to be ripe for the start of a short-covering rally,' said James A. Hyerczyk, analyst at Autochartist.

'Besides the volatility created shortly after the market hit its low, the sure sign of a short-term bottom will be a sustained breakout over 5,893.00. If this occurs then the market may be on pace for a normal retracement of the break from the recent top at 6,017.56 to 5,847.92,' Hyerczyk added.

Rio Tinto sealed a land use agreement with traditional owners in the Pilbara region in Western Australia, where it is the biggest iron ore producer, it said on Friday.

Also, Rio said on Friday it would study the possibility of switching iron ore price settlements to Chinese yuan, though it had no current plans to do this.

Coal miners at Australia's BHP Billiton Mitsubishi Alliance (BMA), the world's biggest exporter of metallurgical coal, voted in favour of the right to take industrial action, BHP Billiton said on Friday.

US lawmakers have raised fresh concerns that BP is not meeting its obligations to victims of the Gulf of Mexico oil spill, the Daily Telegraph said.

Royal Bank of Scotland is considering a new attempt at selling its aircraft leasing division RBS Aviation Capital, sources with knowledge of the matter said on Thursday.

Rupert Murdoch's News Corp and regulators have agreed in principle a deal to remove the final obstacles to a bid for control of BSkyB but a final merger clearance from the government will not come until July, The Financial Times said.

Betfred, Britain's fourth biggest bookmaker, has won an auction to buy the country's state-owned bookmaker, the Tote, sources close to the sale process said on Thursday.

There will be results today from Hornby.