FTSE hit more than 3-week high before US jobs data

By IBTimes Staff Reporter | September 03 2010 11:05 AM

Britain's leading share index hit a more than three-week high on Friday as the market looks beyond a weak employment picture in the United States after factoring in a soft patch in the pace of the economic recovery.

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Shares in Aggreko, the world's largest provider of temporary power, climbed 4.9 percent, topping the FTSE 100, with traders citing talk on the FT Alphaville website that it may be the subject of bid interest from Swiss engineering group ABB. Aggreko declined to comment.

U.S. non-farm payrolls, due at 1:30 p.m. BST, are forecast to have fallen 100,000 after declining 131,000 in July, according to a Reuters survey.

The FTSE 100 was up 28.2 points or 0.5 percent at 5,399.24 at 11:37 a.m. BST, extending its gains to the sixth session. The UK benchmark is up 3.8 percent so far this week and is on track to end a three-week losing streak.

Autonomy advanced 3.4 percent, making it among the top FTSE 100's gainers and extending Thursday's 5.2 percent rise on expectations that the UK software maker could be a bid target.

Index heavyweight Vodafone rose 0.4 percent after both Deutsche Bank and BofA Merrill Lynch raised their price target on the mobile phone operator.

Jobs data this afternoon will have to be exceptionally poor for this market to get a knock on...If we were going to break (lower), we would have broken last week but we haven't, Jawaid Afsar, trader at Securequity, said.

Having said that, we have a very good run this past week. If we do pull back, it's going to be just profit taking, no serious damage.

Fears about the state of the global recovery have eased somewhat this week on surprisingly strong manufacturing data from the United States and China, while economic figures from Australia also improved confidence.

LOWER VOLATILITY

The FTSE 100 volatility index fell 3.2 percent, hitting a one-week low and indicating a firmer appetite for risk.

We had a bit last week felt like Armageddon with the magnitude of the deterioration of the U.S. housing numbers and the durable goods, said Philip Lawlor, investment strategist at Smith & Williamson.

You get a bit of rebound, the market got very oversold, he said. There is a bit of an asymmetric in the market at the moment...It the labour market numbers came out 50,000 stronger than expected, you will get a much bigger reaction on the upside than if they actually come out 50,000 weaker.

Economy-sensitive banks gained 0.7 percent, with Barclays

up 2.1 percent and Standard Charatered rising 1.1 percent.

Despite the recent gains, the FTSE 100 is still looking cheaper than other major indexes. It carried a one-year forward price-to-earnings of 9.55 times, compared with U.S. S&P 500's

11.55 and Germany DAX's 9.87, according to Thomson Reuters Datastream.

(Graphics by Scott Barber and additional reporting by Simon Falush; Editing by Michael Shields)