London open: Stocks rise as investors eye non-farm payrolls

London stocks rose in early trade on Friday, recovering some ground after heavy losses in the previous session as investors mulled encouraging Chinese data and looked ahead to the release of UK manufacturing figures and the latest US non-farm payrolls report.

At 0825 GMT, the FTSE 100 was 0.3% higher at 7,271.20, while the pound was up 0.2% against the dollar at 1.2970 and 0.1% firmer versus the euro at 1.1615.

Data out of China earlier helped to underpin sentiment as it showed manufacturing activity expanded at its fastest pace in nearly three years in October.

The Caixin/Markit purchasing managers' index for the sector printed at 51.7 this month compared to 51.4 in September, beating expectations for a reading of 51.0. This marked the highest level since February 2017.

Looking ahead, the main focus for the day will be the US non-farm payrolls report, unemployment rate and average earnings figures due at 1230 GMT. Before that, Markit's manufacturing PMI for the UK is out at 0930 GMT.

Oanda analyst Craig Erlam said: "The US non-farm payrolls report caps off another chaotic week in the markets, one in which the Fed has cut interest rates again, the US and China have moved closer to a phase one agreement and the UK has, kind of, hopefully, maybe moved closer to leaving the EU while not actually leaving as planned.

"The report is expected to be unusually weak but will be distorted by the General Motors strike so we shouldn't read too much into it. We'd have to see a pretty appalling report to worry traders at this point, although it will be interesting to see just how quickly they start pricing in another Fed rate cut.

"Earlier this week, the markets demanded and the Fed delivered a third consecutive rate cut, easing recession fears for now but I feel it won't take much to reignite them. A terrible jobs report today would certainly aid that, although if the US and China can secure this deal in the coming weeks, those fears would be somewhat alleviated."

The UK manufacturing PMI is expected to have nudged down to 48.1 in October from 48.3 the month before.

On the corporate front, Rentokil Initial gained after announcing the acquisition of Florida Pest Control, while BHP Group edged higher after saying it had approved $44m of funding to restart its Samarco joint venture.

Russian steel maker Evraz was in the green even as it reported flat total steel product sales for the third quarter and a 3.4% quarter-on-quarter decline in consolidated steel output.

Morgan Advanced Materials was boosted by an upgrade to 'buy' at Citi.

On the downside, Rightmove was under the cosh after Shore Capital downgraded its stance on the shares to 'sell' from 'hold'.

Car dealer Inchcape was also on the back foot after Lookers warned that annual profit was set to fall sharply - its second profit warning in less than four months - and announced the departure of its chief executive and chief operating officers.

Market Movers

FTSE 100 (UKX) 7,271.20 0.31%
FTSE 250 (MCX) 20,086.26 0.32%
techMARK (TASX) 3,944.45 0.26%

FTSE 100 - Risers

Melrose Industries (MRO) 215.90p 1.31%
Flutter Entertainment (FLTR) 8,040.00p 1.03%
Rentokil Initial (RTO) 458.80p 0.95%
CRH (CRH) 2,841.00p 0.89%
Anglo American (AAL) 1,998.20p 0.84%
Johnson Matthey (JMAT) 3,095.00p 0.81%
Imperial Brands (IMB) 1,706.00p 0.80%
TUI AG Reg Shs (DI) (TUI) 1,018.00p 0.79%
Bunzl (BNZL) 2,023.00p 0.75%
Glencore (GLEN) 234.38p 0.74%

FTSE 100 - Fallers

Rightmove (RMV) 590.20p -1.40%
Barclays (BARC) 165.92p -1.12%
Standard Chartered (STAN) 696.00p -0.71%
Auto Trader Group (AUTO) 558.60p -0.64%
Whitbread (WTB) 4,044.00p -0.42%
Compass Group (CPG) 2,051.00p -0.24%
ITV (ITV) 133.47p -0.21%
BT Group (BT.A) 204.40p -0.15%
Sainsbury (J) (SBRY) 203.30p -0.10%
3i Group (III) 1,127.00p -0.09%

FTSE 250 - Risers

Airtel Africa (AAF) 66.50p 4.72%
Restaurant Group (RTN) 142.00p 4.72%
Sirius Minerals (SXX) 2.98p 3.69%
Morgan Advanced Materials (MGAM) 242.84p 3.07%
Convatec Group (CTEC) 203.04p 2.99%
IP Group (IPO) 57.34p 2.39%
Aston Martin Lagonda Global Holdings (AML) 408.69p 2.35%
Elementis (ELM) 152.00p 2.22%
Kaz Minerals (KAZ) 477.70p 1.77%
BBA Aviation (BBA) 308.80p 1.71%

FTSE 250 - Fallers

Inchcape (INCH) 626.50p -2.87%
Vivo Energy (VVO) 119.00p -2.46%
Galliford Try (GFRD) 716.46p -2.26%
Wood Group (John) (WG.) 334.00p -1.27%
Crest Nicholson Holdings (CRST) 384.26p -1.07%
Bakkavor Group (BAKK) 117.20p -1.01%
Ibstock (IBST) 239.80p -0.83%
Mediclinic International (MDC) 363.00p -0.82%
OneSavings Bank (OSB) 357.20p -0.78%
UDG Healthcare Public Limited Company (UDG) 767.50p -0.71%