LONDON (ShareCast) - An in-line increase in US non-farm payrolls sparked an impressive surge on equity markets worldwide on Friday afternoon, as worries about the Federal Reserve scaling back its stimulus measures eased, for now at least.

London’s FTSE 100 finished up 76 points on the day (+1.2%) at 6,412. Nevertheless, the index still remains well below the 13-year high of 6,840 reached on May 22nd as uncertainty in regards to the Fed’s ‘exit strategy’ continues to take its toll on sentiment.

The US Labor Department said that non-farm payrolls increased by 175,000 in May, more or less meeting the consensus forecast, following a downwards revision to the previous month’s number. The jobless rate rose from 7.5% to 7.6% to reflect a rise in the participation rate.

The FTSE 100 opened in a cautious fashion today following a recent string of sell-offs on increased speculation that the Fed would soon ‘taper’ quantitative easing (QE) given the steadily improving nature of US economic data. However, given that today’s jobs report failed to materially beat estimates, it is likely to assure some policymakers that the recovery is not yet strong enough to pull the plug.

“If ever there was a Goldilocks number, this is it,” said Trading Director Marcus Bullus from MB Capital. "US job growth is neither too hot nor too cold - and the market's fears about QE tapering have dissolved like sugar in a bowl of warm oatmeal.”

Meanwhile, Market Strategist Ishaq Siddiqi from ETX Capital said that the data “buys liquidity addicts more time to reap the benefits of the loose money environment.”

FTSE 100: Severn Trent jumps on improved offer

Severn Trent surged this afternoon after the LongRiver consortium upped its cash offer for the water provider following the rejection of an earlier proposal by the group earlier this week.

The consortium has offered 2,200p per Severn Trent share, including the 45.51p dividend announced in May, which values the group at £5.3bn at a fully diluted basis. Monday’s rebuffed offer was for 2,125p per share.

Cyclical stocks such as financials and miners were performing well after the US jobs this afternoon: Prudential, RBS and Standard Life were on the rise, closely followed by Rio Tinto, Antofagasta and Glencore Xstrata.

Asset management group Aberdeen was a heavy faller today after Bank of America Merrill Lynch downgraded its rating for the stock to 'underperform', saying that its organic inflows could slow significantly from consensus expectations. "With the stock up around 20% year-to-date, the valuation premium to peers looks unwarranted," the broker said.

Chemicals group Johnson Matthey was also in the red, pulling back after a strong rise yesterday. Citigroup, Deutsche Bank and Goldman have all raised their target prices for the stock this morning following Thursday's well-received full-year results.

FTSE 250: KCOM and 888 surge

Telecoms and internet communication provider Kcom Group advanced after announcing a 10% rise in its final dividend following a 3.1% increase in pre-tax profits.

888 Holdings rallied after New York Congressman Peter King proposed a bill that back online gambling.


FTSE 100 - Risers
Prudential (PRU) 1,118.00p +5.47%
BT Group (BT.A) 312.80p +3.68%
Royal Bank of Scotland Group (RBS) 327.40p +3.31%
Standard Life (SL.) 375.30p +3.22%
Diageo (DGE) 1,956.50p +2.97%
Kingfisher (KGF) 346.70p +2.94%
Aviva (AV.) 334.70p +2.83%
CRH (CRH) 1,359.00p +2.64%
Fresnillo (FRES) 1,144.00p +2.60%
TUI Travel (TT.) 343.50p +2.54%

FTSE 100 - Fallers
Aberdeen Asset Management (ADN) 415.70p -1.68%
Johnson Matthey (JMAT) 2,704.00p -1.67%
ARM Holdings (ARM) 864.50p -1.59%
Hargreaves Lansdown (HL.) 909.00p -1.46%
Sage Group (SGE) 348.00p -1.02%
Meggitt (MGGT) 519.50p -0.95%
Sainsbury (J) (SBRY) 360.70p -0.72%
Wood Group (John) (WG.) 809.50p -0.61%
London Stock Exchange Group (LSE) 1,382.00p -0.58%
Serco Group (SRP) 592.00p -0.50%

FTSE 250 - Risers
888 Holdings (888) 151.50p +8.21%
KCOM Group (KCOM) 83.10p +8.13%
Spirent Communications (SPT) 134.00p +7.72%
Petropavlovsk (POG) 140.10p +6.95%
New World Resources A Shares (NWR) 100.50p +6.52%
Rank Group (RNK) 161.00p +4.48%
African Barrick Gold (ABG) 139.80p +4.17%
Moneysupermarket.com Group (MONY) 203.00p +4.10%
Keller Group (KLR) 904.50p +3.97%
FirstGroup (FGP) 123.70p +3.86%

FTSE 250 - Fallers
Cobham (COB) 262.00p -2.78%
Perform Group (PER) 576.00p -2.70%
Ashmore Group (ASHM) 365.00p -2.69%
Barr (A.G.) (BAG) 505.00p -1.94%
Filtrona PLC (FLTR) 686.00p -1.79%
Home Retail Group (HOME) 151.80p -1.75%
Bank of Georgia Holdings (BGEO) 1,781.00p -1.44%
Telecom Plus (TEP) 1,246.00p -1.42%
RPC Group (RPC) 420.40p -1.29%
Laird (LRD) 192.00p -1.03%

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