London - Britain's top shares advanced on Friday in the run-up to the US February jobs report, as investors looked for more signs that the recovery in the world's largest economy is built on a firm foundation.
The FTSE 100 was up 27.53 points, or 0.4 percent, at 6,466.69 by 11:16 SA time, hitting fresh five-year highs, with the index bolstered by firmer banking stocks.
Atif Latif, director of trading at Guardian Stockbrokers, said many investors, heartened by data earlier in the week showing US private employers hired more workers than expected in February, are sitting on 'long' positions to bet on more gains.
“We may see some profit-taking closer to the (jobs data) but we think that the uptrend on the FTSE with a good number will remain intact,” said Latif, who did not anticipate a strong reaction after the data, but ultimately targeted 6,550.
Employers are expected to have added 160,000 jobs to their payrolls last month, picking up slightly from January's 157,000 count, according to a Reuters survey of economists.
“I think for these figures, an in-line figure is the best number,” Andy Ash, head of sales at Monument Securities, said.
“If we have a very strong figure, then everyone gets concerns that the Fed will step away from QE (quantitative easing), and if we have a very weak figure, then the market potentially gets concerned that the economy's not picking up.”
Joe Rundle, head of trading at ETX Capital, concurred: “If we got a really good unemployment figure today, I think we'd sell off quite aggressively,” he said.
Mining stocks fell behind gains seen on the wider market after top metals consumer China reported a 15.2 percent fall in imports in February and Credit Suisse cut its rating on the sector to “underweight”, with the investment bank citing increased caution on China.
“Investment growth and PMI new orders have dipped. Growth has become even more unbalanced and reliant on borrowing. The risk of policy tightening is growing, with inflationary indicators at two-year highs,” Credit Suisse said in a note.
Stock markets have been underpinned this year by the strengthening US economy and loose monetary policy by central banks around the world and, in a climate of low interest rates, equities are likely to retain the edge over other asset classes.
“Equities remain supported by an underlying bid because people are desperately searching for yield no matter how risky that may turn out to be,” Lex van Dam, hedge fund manager at Hampstead Capital, which manages around $500 million assets. - Reuters