Footsie extends rally as US jobs data beats forecasts

London's blue chip share index secured its sixth winning session in a row yesterday as better-than-expected jobs data helped extend the recent rally.

The closely watched US non-farm payrolls were expected to show more than 100,000 jobs lost over the month, but the figure was far lower than expected at 54,000.

The fall in payrolls last month was largely a result of 114,000 temporary census workers being laid off.

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Private employment, considered a better gauge of labour market health, increased 67,000 after a revised 107,000 gain in July. Markets had expected a rise of only 41,000 in August.

In addition, the government revised payrolls for June and July to show 123,000 fewer jobs lost than previously reported.

London's FTSE 100 Index rose by 1 per cent – up 57.11 points to 5428.15 – while markets worldwide also made strong advances on the news.

The Dow Jones Industrial Average on Wall Street lifted around 70 points higher by midday, although early session gains were pared back a little after economic data was also released on the US services sector.

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The figures showed expansion for the eighth straight month in August, but the pace of growth slowed, according to a trade group survey.

The Institute for Supply Management's index of national services activity fell to 51.5 from 54.3 in July. That was below market expectations for 53.5.

Prices for safe-haven US government debt fell sharply, however, as traders saw the odds of growth contracting lessening. Economic figures in the UK were also a disappointment, showing a slowdown in growth among services firms and a slump in construction orders.

The pound largely held firm despite UK recovery fears, up fractionally against the dollar at 1.54 dollars, and down slightly to 1.20 euros against the euro.

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In a quiet day for corporate announcements, the only major blue-chip to offer any news was oil giant BP, which said the costs of the Gulf of Mexico oil spill had risen to 5.2bn so far. Shares rose 91/8p to 4013/4p.

IT firm Autonomy, power supplies company Aggreko and Cable & Wireless Worldwide – which have all been linked with vague takeover talk in recent days – led the advance, up 59p to 1775p, 79p to 1515p and 31/8p to 73p respectively.

Home Retail Group, the Argos and Homebase owner in line for demotion from the FTSE 100 next week, was among the fallers as the company slipped 1/2p lower to 2211/4p.

In the FTSE 250, troubled social housing firm Connaught was off 2.47p to 16.45p, or 13 per cent, as worries over a potential debt-for-equity swap continued to hit the stock.

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Connaught – whose shares have been devastated by a succession of profit warnings – is set to be relegated to the ranks of the small-caps next week.

The firm was followed lower in the second tier by oil explorer SOCO International, which slid 40p to 436.6p, or 8 per cent, after drilling disappointment in the Congo.

Spread betting firm IG Group was also on the back foot after brokers at UBS cut their rating to neutral, shifting shares down 12p to 511p, or 2 per cent.

But Currys and PC World owner DSG International ticked 11/8p ahead to 261/4p as Numis analysts raised full year profit forecasts following Thursday's trading update, which showed a 6 per cent rise in UK like-for-like sales.

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Back in the top flight, supermarket Morrisons declined by 13/4p to 2891/4p after reports that the group is set to signal a move into online groceries in next week's results.

The biggest Footsie risers of the day were Aggreko, Cable & Wireless Worldwide, Barclays up 13p to 325p and Autonomy.

The biggest Footsie fallers were Tullow Oil down 29p to 1156p and African Barrick Gold, off 91/2p to 602p.

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