London close: Korean breakthrough, US jobs data buoy shares

Shares finished at their best level of the session, amid optimism around the situation on the Korean peninsula, and after a bumper US non-farm payrolls report for February boosted copper and oil futures which in turn lifted shares of miners and oilers.

In a break with the standard practice of the past few decades, overnight US President Trump agreed to meet by next May with Kim Jong for talks about its nuclear weapons, something North Korea had been seeking with an American president for more than 20 years.

"It's been a fairly good week for European equity markets [...] This week's gains do need to be put in the context of the bigger declines seen at the end of last week, which saw the FTSE100 and the DAX open this week at one year lows.

"The rebounds this week have also been helped, particularly in Asia, by last night's reports that US President Trump would be meeting North Korean leader Kim Jong Un with a view to discussing nuclear de-escalation, in a historic move. While there is plenty of cynicism about how this might play out, the fact that we are talking about a historic meeting when six months ago there was talk of nuclear war must surely be progress," said CMC Markets UK's Michael Hewson.

Earlier, London stocks had wavered, with investors erring on the side of caution as data revealed that the UK construction sector suffered its biggest monthly drop in six years in January.

Against that backdrop, the FTSE 100 finished 0.30% up on the day at 7,224.51, while the pound was 0.33% higher against the US dollar and by 0.22% versus the euro at 1.3861 and 1.1243, respectively.

US job growth printed at 313,000 for last month, alongside upwards revisions to data for the prior two months, dwarfing economists' forecasts for an increase of 195,000.

In reaction, by the closing bell front month Brent crude oil futures were climbing 2.56% to $65.28 a barrel on the ICE, while three-month LME copper advanced to $6,862 per metric tonne amid short-coverinig by traders.

Data released earlier by the Office for National Statistics showed construction output declined 3.4% in January from December, coming in far worse than expectations of a 0.3% drop and marking the biggest month-on-month slide since June 2012.

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said: "Rising interest rates and Brexit uncertainty are proving to be a toxic combination for the construction sector. The sharp decline in output in January primarily reflected an 8.3% month-to-month collapse in new work in the private housing sector.

"We doubt that housebuilding will recover fully soon; the housing activity index of the construction PMI rose only to 51.2 in February, having fallen to 48.1 in January from 55.3 in December. The prospect of further increases in interest rates is subduing buyer demand both for new and existing homes."

Meanwhile, industrial production rose 1.3% on the month in January after falling by the same amount in December, missing expectations for a 1.5% jump. Manufacturing output increased by just 0.1% on the month, down from the 0.3% growth recorded in December and short of the 0.2% forecast. This meant the three-month on three-month growth rate slowed to 0.9% from 1.3%.

In corporate news, satellite operator Inmarsat fell after saying it would be cutting its annual dividend to 20 cents a share as it cited “the lack of visibility” over future cash payments from US partner Ligado beyond the end of 2018 and the need to take advantage of the growing in-flight wi-fi market.

Renewi slumped after the waste-to-products business said a review of contracts in its waste management division would lead to additional write-downs worth a £73m.

Building products supplier SIG dropped as it reported a 10% decline in underlying profits and cash flow shrinking by a third as the UK market becomes "increasingly challenging".

On the upside, sports betting and gaming company GVC Holdings, which received shareholder approval for its merger with Ladbrokes Coral this week, rallied as posted a rise in full-year adjusted profit and net gaming revenue, thanks in part to the acquisition of Bwin.

In broker note action, Smurfit Kappa was upgraded to 'hold' at Kepler Cheuvreux, Esure was lifted to 'outperform' by RBC Capital Markets and G4S was upgraded to 'hold' at SEB Equities.

Meanwhile, Pennon and Severn Trent were boosted to 'overweight' at JPMorgan and Acacia Mining and Centamin were initiated at 'sell' and 'hold', respectively, by Berenberg.

Market Movers

FTSE 100 (UKX) 7,224.51 0.30%
FTSE 250 (MCX) 20,085.07 0.59%
techMARK (TASX) 3,390.63 0.00%

FTSE 100 - Risers

NMC Health (NMC) 3,506.00p 4.52%
Ashtead Group (AHT) 2,010.00p 3.37%
GKN (GKN) 435.10p 3.25%
Rentokil Initial (RTO) 272.40p 3.06%
Antofagasta (ANTO) 895.00p 2.80%
Anglo American (AAL) 1,752.20p 2.64%
Just Eat (JE.) 788.60p 2.47%
Fresnillo (FRES) 1,237.50p 2.44%
BHP Billiton (BLT) 1,435.80p 2.28%
BAE Systems (BA.) 601.80p 2.17%

FTSE 100 - Fallers

WPP (WPP) 1,205.00p -2.11%
Paddy Power Betfair (PPB) 7,900.00p -1.44%
Shire Plc (SHP) 3,192.50p -1.12%
National Grid (NG.) 783.70p -1.00%
Land Securities Group (LAND) 916.00p -0.99%
easyJet (EZJ) 1,563.00p -0.95%
GlaxoSmithKline (GSK) 1,334.00p -0.80%
3i Group (III) 920.80p -0.80%
SEGRO (SGRO) 599.00p -0.79%
International Consolidated Airlines Group SA (CDI) (IAG) 622.80p -0.79%

FTSE 250 - Risers

FDM Group (Holdings) (FDM) 1,005.80p 5.11%
GVC Holdings (GVC) 945.50p 5.00%
Vectura Group (VEC) 81.35p 4.63%
Sirius Minerals (SXX) 29.70p 4.50%
Hunting (HTG) 724.50p 4.24%
Wood Group (John) (WG.) 656.60p 4.09%
AA (AA.) 83.22p 4.08%
Melrose Industries (MRO) 224.70p 4.03%
Galliford Try (GFRD) 880.00p 4.02%
Sanne Group (SNN) 701.00p 4.00%

FTSE 250 - Fallers

SIG (SHI) 136.30p -9.01%
Inmarsat (ISAT) 432.20p -6.73%
Renewi (RWI) 86.00p -4.25%
Brown (N.) Group (BWNG) 193.00p -3.50%
Alfa Financial Software Holdings (ALFA) 376.00p -3.34%
Serco Group (SRP) 93.95p -3.04%
Ferrexpo (FXPO) 293.00p -2.98%
RHI Magnesita N.V. (DI) (RHIM) 4,310.00p -2.82%
IP Group (IPO) 109.60p -1.79%
Clarkson (CKN) 3,290.00p -1.79%