City slips as grim US jobs figures knock sentiment

Rather than trigger a fresh sell-off for world markets, the data showing the US shed another 95,000 jobs in September prompted a recovery as analysts said it will now require a substantial pick-up in inflation before the Federal Reserve's next meeting in November to prevent more quantitative easing.

With that in mind, the Dow Jones Industrial Average climbed around 0.5 per cent to breach the 11,000 barrier, while the FTSE 100 Index recovered from a 50 point loss to finish 4.52 points lower at 5657.61.

Miners were encouraged by the prospect of more measures to boost the economic recovery, while the ongoing weakness of the dollar kept mineral prices high. The pound was 0.5 per cent stronger against the greenback, as well as against the euro.

Resources stocks dominated the risers' board with Lonmin up 69p to 1819p, Xstrata ahead 36p to 1296p and Anglo American 611/2p stronger at 2726p.

Elsewhere in the top flight, Barclays was closely watched after it emerged that Manchester City football club owner Sheikh Mansour of Abu Dhabi had effectively sold 220 million shares as part of a hedging transaction stemming from the support given to the bank during the financial crisis in 2008.

The blue-chip stock fell 63/4p to 2971/4p, a drop of 2 per cent.

Marks & Spencer failed to make much headway despite a number of broker upgrades in the wake of better-than-expected trading figures on Thursday.

Shares were up 1p at 411p as investors heeded warnings over the possible impact of difficult trading conditions in 2011.

The housebuilding sector was still feeling the effect of shock figures from Halifax on housing prices, which revealed a record 3.6 per cent decline in September.

After looking at the Halifax report, Panmure Gordon downgraded its recommendations on FTSE 250 housebuilders Redrow and Taylor Wimpey – down 23/8p to 1225/8p and 11/4p to 261/2p respectively.

Elsewhere in the second tier, Thomas Cook shares advanced 3 per cent after the holidays giant unveiled a deal with the Co-op to merge their high street travel businesses.

With more than 1,200 shops, the newly-formed company will be the UK's largest travel agent and second biggest in foreign exchange.

The tie-up is expected to generate savings of around 35m a year for the FTSE 250 firm although it is feared that hundreds of jobs will be lost through the merger.

The Usdaw union said it planned to hold talks with the new company in the coming months in a bid to secure as many jobs as possible. Shares lifted 61/8p to 1853/4p.

Meanwhile, Speedy Hire recovered from a weak start after the tool firm said it would take a 1.7m bad debt charge due to the collapse of social housing group Connaught, which was a major customer.

Speedy also expects to report a first half operating loss, but said it remained on track to meet full-year expectations. Shares were unchanged at 223/4p.

The four biggest FTSE 100 Index risers were Lonmin, Xstrata, Anglo American and Randgold Resources ahead 140p to 6515p.

The biggest fallers of the session were Sage Group down 127/8p to 2695/8p, Fresnillo off 41p to 1248p, Land Securities down 16p to 671p and Barclays.