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(Sharecast News) - London stocks ended higher on Thursday, buoyed by growing investor expectations of a Bank of England rate cut next month following recent soft UK labour market data.
Sentiment was further supported by a decline in weekly US jobless claims, which suggested resilience in the American economy without reigniting inflation concerns.
The FTSE 100 index rose by 0.52% to close at 8,972.64 points, while the more domestically-focussed FTSE 250 climbed 0.76% to 21,766.43 points.
In currency markets, sterling was last down 0.04% on the dollar to trade at $1.3417, while it strengthened 0.34% against the euro, changing hands at €1.1569.
"Having seen a rapid retreat from the briefly attained 9,000 mark earlier this week, the FTSE 100 made steady progress on Thursday to put this milestone level back within reach," said AJ Bell investment analyst Dan Coatsworth.
"Financial stocks were among the gainers, while specialist distributor Diploma led the way as it lifted its full-year target for organic growth.
"A mixed and messy set of UK jobs numbers saw the pound make some modest progress."
Coatsworth noted that the numbers were being "closely watched" by the Bank of England as its policymakers weighed their next decision on rates after an uptick in inflation earlier this week.
"While payroll employment fell for a fifth consecutive month in June, there was a significant downward revision to the previous estimate for the number of payrolled staff cut in the previous month.
"Even though wage growth for the three months to the end of May eased, it remains elevated.
"It all adds up to a tricky backdrop for the Bank to navigate as it looks to plot a course for rates, particularly given the evidence of renewed inflationary pressures."
US jobless claims fall, UK unemployment unexpectedly rises
In economic news, initial jobless claims in the US fell by 7,000 to 221,000 in the week ended 12 July, marking the lowest level since April and defying expectations for an increase.
Continuing claims remained broadly steady at 1.95 million, slightly below forecasts, while the four-week moving average rose to its highest level since November 2021.
The insured unemployment rate held at 1.3% for the week ending 5 July, suggesting a cooling but still resilient labour market.
On home shores, UK unemployment unexpectedly rose to 4.7% in the three months to May, the highest since early 2021 and above consensus expectations.
Wage growth slowed, with average earnings increasing 5% annually, down from 5.3% for regular pay and 5.4% for total pay the month prior.
Vacancies declined for a 36th consecutive quarter, falling by 56,000 to 727,000 in the April to June period, underscoring weakening demand for labour.
"The labour market continues to weaken, with the number of employees on payroll falling again, though revised tax data shows the decline in recent months is less pronounced than previously estimated," said Liz McKeown, director of economic statistics at the ONS.
"Pay growth fell again in both cash and real terms, but both measures remain relatively strong by historic standards.
"The number of job vacancies is still falling and has now been dropping continuously for three years."
On the continent, eurozone inflation was confirmed at 2.0% in June, aligning with the European Central Bank's target.
Core inflation, which excludes volatile items like food and energy, remained unchanged at 2.3%, its lowest since January 2022.
Services inflation ticked up slightly, while energy prices continued to fall, though at a slower rate.
Ocado rockets on return to profit, easyJet in the red
On London's equity markets, online grocer and warehousing technology developer Ocado Group soared 18.47% after reporting a return to profit in the first half.
The company said both its technology and logistics divisions delivered double-digit revenue growth, as it reaffirmed its full-year outlook.
Diploma also climbed strongly, up 6.44%, after upgrading its full-year organic growth guidance to 10% from 8%, citing a "strong" performance.
Future rose 2.81% after stating it was trading in line with expectations and remained on track to meet full-year targets.
Home decor retailer Dunelm Group added 4.03% as it said profit for the year would meet consensus, supported by a "good" fourth-quarter showing.
Cybersecurity firm NCC Group advanced 3.95% amid news it is reviewing strategic options for its cyber division, pending a potential sale of its Escode business.
Lloyds Banking Group gained 2.36% following an upgrade from KBW to 'outperform' and a price target lift to 90p.
Defence contractor QinetiQ rose 1.81% after announcing a record order backlog of approximately £5bn at the end of the first quarter.
On the downside, easyJet descended 4.91% after warning that higher fuel costs and ongoing air traffic control strikes in France would reduce annual profit by around £25m.
Coats Group tumbled 12.3% after launching a £246m share placing to fund its $770m acquisition of US insole maker OrthoLite.
Mr Kipling and Homepride parent Premier Foods dropped 3% as it reported sluggish first-quarter sales, with grocery revenues dipping due to unseasonably warm weather affecting demand.
Reporting by Josh White for Sharecast.com.
Market Movers
FTSE 100 (UKX) 8,972.64 0.52%
FTSE 250 (MCX) 21,766.43 0.76%
techMARK (TASX) 5,183.02 0.73%
FTSE 100 - Risers
Diploma (DPLM) 5,220.00p 6.44%
Whitbread (WTB) 3,121.00p 3.21%
Ashtead Group (AHT) 4,825.00p 3.12%
Intermediate Capital Group (ICG) 2,106.00p 3.03%
Melrose Industries (MRO) 536.00p 2.92%
Flutter Entertainment (DI) (FLTR) 22,430.00p 2.75%
Barclays (BARC) 351.20p 2.51%
IMI (IMI) 2,186.00p 2.44%
Lloyds Banking Group (LLOY) 78.20p 2.36%
Standard Chartered (STAN) 1,333.00p 2.22%
FTSE 100 - Fallers
easyJet (EZJ) 500.00p -4.91%
British American Tobacco (BATS) 3,813.00p -1.55%
AstraZeneca (AZN) 10,312.00p -1.19%
Glencore (GLEN) 303.30p -1.12%
Anglo American (AAL) 2,200.00p -1.12%
Severn Trent (SVT) 2,639.00p -0.98%
United Utilities Group (UU.) 1,098.50p -0.90%
Fresnillo (FRES) 1,460.00p -0.82%
Antofagasta (ANTO) 1,821.50p -0.79%
Mondi (MNDI) 1,167.50p -0.72%
FTSE 250 - Risers
Ocado Group (OCDO) 276.40p 17.37%
Frasers Group (FRAS) 681.50p 5.66%
Renishaw (RSW) 2,970.00p 4.21%
Dunelm Group (DNLM) 1,187.00p 4.03%
NCC Group (NCC) 147.20p 3.95%
Aston Martin Lagonda Global Holdings (AML) 76.70p 3.65%
Energean (ENOG) 950.00p 3.54%
Big Yellow Group (BYG) 939.00p 3.07%
Indivior (INDV) 1,176.00p 3.07%
Discoverie Group (DSCV) 711.00p 3.04%
FTSE 250 - Fallers
Coats Group (COA) 72.00p -12.30%
Ocean Wilsons Holdings Ltd. (OCN) 1,400.00p -5.41%
Premier Foods (PFD) 187.60p -3.00%
Endeavour Mining (EDV) 2,172.00p -2.69%
XPS Pensions Group (XPS) 366.50p -2.66%
RHI Magnesita N.V. (DI) (RHIM) 2,880.00p -1.87%
Pagegroup (PAGE) 265.00p -1.85%
Hays (HAS) 65.05p -1.81%
Trainline (TRN) 273.40p -1.65%
Trustpilot Group (TRST) 267.40p -1.62%
