FTSE hits 6-week closing high after U.S. jobs data

By Tricia Wright

LONDON (Reuters) – Strong banks and commodity stocks hauled Britain’s top share index back above the 6,000 level to a nearly six-week closing high on Friday as solid U.S. jobs data indicated the economic recovery was gathering pace.

BP (BP.L: Quote, Profile, Research) led integrated oil stocks higher, adding 3.5 percent, after JPMorgan put the oil major on its EMEA analyst focus list, saying it is “seriously undervalued” and has 26 percent upside.

The FTSE 100 (.FTSE: Quote, Profile, Research) ended up 101.16 points, or 1.7 percent, at 6,009.92, its highest close since February 21. It ended down 0.7 percent on Thursday after six straight sessions of gains.

The index has managed a 1.9-percent advance on the year, having rallied more than 7 percent in the past two weeks from its March low of 5,591.59 just after the Japanese earthquake.

Banks (.FTNMX8350: Quote, Profile, Research) rebounded after a sharp sell-off in the auction period on Thursday when it was announced Ireland’s remaining lenders needed to recapitalize to the tune of 24 billion euros ($34.11 billion), putting a 70-billion-euro total price on protecting its banks from future shocks.

U.S. jobs data pointed to a decisive shift in the labor market, with employment recording a second straight month of solid gains in March and the jobless rate falling to a two-year low of 8.8 percent.

“Markets are looking good as we start the second quarter; employment numbers from the USA still show signs of recovery, and the stress test in Ireland wasn’t as bad as feared,” said Mic Mills, head of electronic trading at ETX Capital.

“BP appears to be in a position to help the rally continue (after upbeat comment) from JPMorgan.”

CAUSE FOR OPTIMISM?

Observers said the way the index has bounced since the March 11 earthquake in Japan gives evidence of a strong market, with a number of data releases indicating the recovery is on track.

“(The rebound) goes to show that for all those people who were sitting on the sidelines waiting for things to get a bit cheaper, there are plenty of people still willing to go long the market,” said Angus Campbell, head of sales at Capital Spreads.

Data showing Chinese factories are growing modestly while cost inflation slowed helped support the miners (.FTNMX1770: Quote, Profile, Research), with Randgold Resources (RRS.L: Quote, Profile, Research) best off, up 4.7 percent, extending Thursday’s post-update advance.

Other market watchers were treading with caution, saying the rally could be used as an opportunity to rotate into more defensive sectors.

“As we come into the first-quarter earnings season, I think that the rise in commodity prices is going to manifest itself in some cautious outlook statements in the corporate sector,” said Jeremy Batstone-Carr, strategist at Charles Stanley.

UBS upgraded the European pharmaceuticals sector to small overweight, naming GlaxoSmithKline (GSK.L: Quote, Profile, Research) as one of its favored stocks. The drugmaker climbed 0.9 percent.

Energy services firm John Wood Group (WG.L: Quote, Profile, Research) grabbed the top spot on the FTSE 100 leader board, up 5.1 percent after it confirmed the appointment of Bob Keiller as an executive director.

Private equity group 3i Group (III.L: Quote, Profile, Research), meanwhile, topped the fallers’ list, off 4.4 percent, after it said a weak performance in the UK had offset strong growth in Northern Europe.

(Additional reporting by David Brett; Editing by Will Waterman)

FTSE hits 6-week closing high after U.S. jobs data