US good news gives FTSE a late boost

Investors are awaiting non-farm job figures from the United States today and any news on whether the US Federal Reserve will launch its third round of quantitative easing by printing more money.

Will Hedden, a sales trader at IG Index, said: “Quite how markets will react to the payroll data remains to be seen – against a backdrop of possible Fed intervention, it does seem like this could be a win-win situation for many investors. With markets already well into a grinding recovery from the harsh selling of last month, there is scope for more profits to be booked quickly ahead of what will be a long weekend for Wall Street.”

The pound fell against the dollar to $1.61 after the strong US data, but was up against the euro at €1.13, after the single currency was weakened by gloomy German economic figures.

The banking sector was buoyed after reports that Business Secretary Vince Cable, the cabinet’s most vocal bank critic, had accepted it may be impossible to implement the proposals of the Independent Commission on Banking before 2015.

Royal Bank of Scotland lifted 8 per cent, or 1.98p to 26.3p, while a note from Investec Securities identifying Barclays as a stand-out “buy” helped its shares improve 9.6p to 180.4p. Lloyds Banking Group was 2.1p stronger at 35.7p.

But the London market was dragged down after data from Markit showed manufacturing across Europe contracted to its lowest level since August 2009, with the powerhouse German economy faring worse than expected, fuelling fears of a double dip recession. Data from the UK showed manufacturing activity sank to a 26-month low in August while the volume of new orders declined for the fourth month running.

Early falls for London’s blue chip index were echoed across Europe, with the DAX in Germany down nearly 1 per cent.

Financial services firm Hargreaves Lansdown was the biggest riser, up 17 per cent, after it offset recent worries about the impact of regulatory changes on its business by posting a 46 per cent rise in full-year profits to £126 million. Shares closed up 76.5p at 508.5p.

Among the Scottish stocks, Dunfermline-based eye scanner maker Optos had been up 4.7 per cent in morning trade after a positive broker note from Collins Stewart. But the stock eased back in the afternoon to close up just 0.5p or 0.3 per cent at 158.5p.

Oil stocks were also in demand, with Deo Petroleum up 13.2 per cent or 4.5p at 38.5p and fellow Aberdeen-based explorer Xcite Energy 6.6 per cent or 8.75p higher at 142.25p.

A spokeswoman for Parkmead was at a loss to explain the 16.7 per cent jump in the firm’s share price, up 2.25p to 15.75p. Parkmead is an investment vehicle targeting oil and gas explorers and is run by Tom Cross, the former chief executive of Aberdeen’s Dana Petroleum, which was bought by the Korea National Oil Company last year.