Morgan Advanced Materials Share News (MGAM)

LONDON (Alliance News) - UK stocks recovered from earlier losses to end mostly unchanged Friday, after a sluggish US jobs report led to speculation that the US Federal Reserve will choose to delay its next interest rate increase.

The FTSE 100 ended up 0.1%, or 8.45 points, at 6,125.70, rising from a low of 6,054.74 earlier in the day to end the week down about 2%. The FTSE 250 closed down 0.1%, or 12.94 points, at 16,648.76 and the AIM All-Share rose 0.1%, or 0.39 point, to end at 722.78.

In Paris, the CAC 40 index ended down 0.4%, while the DAX 30 in Frankfurt finished up 0.2%.

US shares were unchanged to lower at the London close, with the Dow 30 flat, the S&P 500 index down 0.2% and the Nasdaq Composite down 0.3%.

"Markets had an undistinguished finish to a rough week after data showed US job growth slowed in April, adding to concerns that the global economy has hit a soft patch," Jasper Lawler, market analyst at CMC Markets, said.

Employment in the US climbed by much less than expected in the month of April, the Labor Department revealed in its closely watched report on Friday. Non-farm payroll employment rose by 160,000 in April. Economists had estimated an increase of about 200,000 jobs.

Revised data also showed that US employment in February and March increased by 233,000 jobs and 208,000 jobs, respectively, reflecting a net downward revision of 19,000 jobs. The US unemployment rate held steady at 5.0% in April, having been expected to edge down to 4.9%.

Paul Ashworth, chief US economist at Capital Economics, said the "modest" increase in non-farm payrolls in April "will have caught a few people out". Capital Economics, which had estimated a 170,000 increase in non-farm payrolls in April, still thinks the next meeting of the Federal Open Market Committee in mid-June will result in an increase in US interest rates, though Ashworth said this is shaping up to be a close call.

"Employment was never going to continue rising at more than 200,000 a month indefinitely. Those monthly gains are simply unsustainable in an economy with a potential economic growth rate of less than 2%," Ashworth said.

Analysts at Lloyds Bank said that even though the jobs report wasn't "very weak", it may be "sluggish enough to sway the Fed in the direction of delaying another interest rate hike."

"Before raising rates the Fed will want some reassurance that the slowdown in the labour market is temporary and that output growth is picking up," Lloyds said.

Evidence of improving output growth came earlier in the week, according to Lloyds, when the Institute for Supply Management said its non-manufacturing index for the US climbed to 55.7 in April from 54.5 in March. Economists had expected the index to inch up to just 54.7.

At the London equities close, the euro traded at USD1.1423, hardly changed from USD1.1406 at the equities close Thursday. The pound was at USD1.4440, against USD1.4487 late Thursday.

Meanwhile, Brent oil was quoted at USD45.77 a barrel Friday at the London equities close, against USD45.72 a barrel on Thursday. The North Sea benchmark reached its highest level of 2016 on Friday last week at USD48.25 a barrel.

In the FTSE 100, gold miners Randgold Resources, up 6.6%, and Fresnillo, up 6.2%, sat atop the list of risers, boosted after the weak US jobs report boosted the underlying precious metal. Given that gold does not offer income to investors, lower interest rates mean there is less opportunity cost to holding the precious metal as an inflation hedge. Similarly, Centamin, another gold miner, was the biggest riser in the FTSE 250, up 9.3%.

Gold was quoted at USD1,292.82 an ounce at the London equities close on Friday, compared with USD1,276.39 the same stage on Thursday, rising sharply in the wake of the US jobs report.

Inmarsat saw it share price fall by 5.9%, making it the biggest faller in the FTSE 100, extending a 7.0% drop on Thursday, when the satellite communications company revised down its 2016 revenue guidance. First-quarter pretax profit fell by 39%, Inmarsat said, with the underlying trading environment remaining tough amid lower demand in the three-month period.

EasyJet, the budget airline, lost 1.7%. The low-cost airline reported growth in passenger numbers in April year-on-year, but a decline in load factor. EasyJet said it carried 6.1% more passengers in April 2016 than in April 2015, to 6.4 million from 6.0 million. Its load factor, however, slipped by 0.4 percentage point to 90.4% from 90.8%.

On a rolling 12-month basis, passenger numbers rose by 7.4% to 71.1 million from 66.2 million, while load factor increased by 0.5 percentage point to 91.5% from 91.0%.

In the FTSE 250, Capital & Counties Properties closed up 3.9%. The property company said it has seen positive momentum at its Covent Garden estate in central London, and has introduced premium retail brands to the site. The company noted that the estate remains on track to achieve an estimated rental value of GBP100.0 million by December 2017.

Morgan Advanced Materials was up 3.1% after the ceramic materials maker said trading in the first quarter met its expectations and it affirmed its full-year outlook.

Morgan Advanced said trading conditions in the quarter to the end of March were in line with its forecasts and unchanged from its outlook when it published annual results in February. Sales in 2016 to date, on a constant currency basis, are broadly flat year-on-year, the company said. Sales grew in its Thermal Products unit in the first quarter, driven by Asian and European growth and against a relatively soft comparative for the year before.

Interserve dropped 16%, have been down as much as 30%. The FTSE 250 support services and construction company said it expects to incur a GBP70.0 million charge in the first half, due to cost overruns and delays in its energy-from-waste contract in Glasgow.

Interserve said its expectations for its UK construction division have been hit "significantly" by a further deterioration in its building contract in Glasgow, and now expects net debt to come in GBP35.0 million higher than its previous guidance. The cost overruns and delays relating to its Glasgow contract are coming primarily from issues relating to the design, procurement and installation of the gasification plant, together with continuing challenges with the supply chain.

Man Group, the London-listed hedge fund manager, also was among the biggest fallers in the FTSE 250, down 8.6%. About 40% of votes cast at Man's annual meeting went against the company's remuneration report. Over 430.1 million votes were cast rejecting the report, against almost 640.4 million votes voting in favour. Despite the substantial amount of shareholders rejecting the proposal, it still passed as over 50% of the votes cast were in support.

"Each year, the Remuneration Committee invites and reviews feedback received from shareholders on the group's remuneration structure and practice in the light of the changing market place and Man Group's evolving strategy and development," Man Group said.

On AIM, Conroy Gold & Natural Resources closed up 36%, after natural resources investor Metal Tiger put a further GBP45,465 into the company. Metal Tiger bought 185,000 shares in Conroy Gold at an average price of 24.6 pence per share. Those shares represent around a 3.35% stake in Conroy Gold. Metal Tiger shares rose 4.8%.

Ascent Resources descended 39%. A Slovenian court withdrew the IPPC permit covering the Petisovci oil and gas project in the country in a decision the company said is "contrary to Slovenian law".

"In summary the decision is not based on any objections to the Petisovci project but rather the permit application process. It is clear to the company and its advisers that the decision of the Court is directly contrary to Slovenian law," Ascent said in a statement.

In the economic calendar, Sunday will see trade figures from China. The numbers will be followed on Monday by German factory orders and UK house prices, courtesy of Halifax, as well as a Eurogroup meeting of finance ministers from eurozone countries.

In the UK corporate calendar, FTSE 250 funeral services provider Dignity and bakery Greggs publish trading statements. Trade exhibition and conference organiser ITE Group and pet healthcare company Premier Veterinary Group report half-year results.

By Samuel Agini; samagini@alliancenews.com; @samuelagini

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