FTSE 100 edges higher, US stocks rise after jobless claims data - UPDATE

UK stocks held on to yesterday’s gains despite today’s somewhat disappointing construction data and bearish statements from head of the Eurogroup Jean Claude Juncker, who called the negotiations between Greece and its private bondholders “ultra difficult”.

The FTSE 100 stood at 5,793, up just 1.5 points from Wednesday’s close.

The Markit/CIPS PMI index for the construction sector fell from 53.2 in December to 51.4 last month with readings above 50 indicating expansion, while anything below that level signals contraction. The weaker than expected construction figures were offset by weekly jobless claims data from the US Department of Labor.

The report showed that the number of initial applications for unemployment benefits fell 12,000 to 367,000 last week. This was slightly ahead of expectations as analysts polled by Bloomberg forecast a decline of 10,000.

Traders are now looking to tomorrow’s crucial non-farm payrolls data for January. The official figures from the Department of Labor will follow yesterday’s report from payrolls processor ADP, which showed that the private sector created 170,000 jobs last month.

Mining giant Xstrata (LON:XTA, up 10.3pct at 1,235p) and commodities traded Glencore (LON:GLEN, up 6.7pct at 460.5p) topped the FTSE 100 leaderboard after confirming they were in merger talks.

Other mining stocks including Vedanta Resources (LON:VED, up 4.5pct at 1,307p), Antofagasta (LON:ANTO, up 2.5pct at 1,363p) and Anglo American (LON:AAL, up 2.3pct at 2,797p) also showed up among the top risers.

Outside of the mining sector, shares in Smith & Nephew (LON:SN., up 4.6pct at 640.5p) were in demand after the medical devices manufacturer announced 800 job cuts.

The heaviest fallers in the blue chip index included consumer goods company Unilever (LON:ULVR, down 4.5pct at 1,992p), which reported lower than expected sales and profit growth for 2011.

Unilever was followed by pharmaceutical major AstraZeneca (LON:AZN, down 3.8pct at 2,971.5p), whose 2011 also fell short of forecasts.

US markets

US equities were off to a positive start on the back of the positive jobs report.

The Dow Jones Industrial Average (DJIA) rose 17 points (0.15 percent) to reach 12,733 and the broader S&P 500 index advanced one points (0.1 percent) to 1,325.

Today’s biggest event will be Federal Reserve chairman Ben Bernanke’s testimony before the House Budget Committee.

The Fed chairman will be asked about the results of last week’s meeting of the Federal Open Market Committee (FOMC), which resulted in a decision to keep interest rates at near zero level through 2014 to support the economic recovery.

The move raised eyebrows as it came after a market improvement in the jobs market in December when the economy created 200,000 new jobs.

However Bernanke said the recovery was yet to enter a “new, stronger phase”.

On the corporate front, Facebook has officially filed for an initial public offering (IPO) this morning.

The world’s largest social network is looking to raise US$5 billion via the IPO, which would value the business at a total US$100 billion.

UK corporate news

Back in the UK, Smith & Nephew said it posted a US$279 million profit in the final quarter of 2011 as revenues improved four percent to US$1.1 billion, taking its full year revenues to US$4.27 billion and profits to US$961 million.

Both revenues and profits were ahead of market expectations, which the company said was due to strong revenue growth at its Endoscopy and Advanced Wound Management businesses.

Meanwhile, Unilever, which owns the Lipton, Dove and Ben & Jerry brands, reported five percent growth in revenues to €46.5 billion during the year, while its net profits rise marginally from €4.24 billion in 2010 to €4.25 billion.

Unilever said trading conditions during the year were tough, owing to economic uncertainty in Europe and the US, which were offset by the strong performance of emerging markets, where underlying sales jumped 11.5 percent.

“We expect the external macro-economic environment to remain difficult in 2012 and input cost headwinds will persist, although to a lesser extent than in 2011,” said chief executive of Unilever Paul Polman.

Fellow blue chip Royal Dutch Shell (LON:RDSB, down 1pct at 2,304p) reported lower than forecast growth in sales and profits. As oil prices surged in 2011, the group’s earnings jumped from US$18.6 billion in 2010 to US$28.6 billion last.

The group offered a cautious outlook for 2012, saying the global economy and energy markets are likely to see continued high volatility.