By This Is Money Reporters
14.05: The FTSE 100 has dipped 7.6 points to 6,550.7 after US jobs growth in January missed expectations.
The keenly-watched monthly employment report showed the US added 113,000 jobs last month, rather than the 185,000 number forecast by economists.
However, the US jobless rate fell to 6.6 per cent, from 6.7 per cent in December.
Market watch: Traders eye influential jobs report for signals on where US economy is heading
Official figures showed the UK trade deficit narrowed sharply to a 17-month low in December.
But any hopes this might be a sign of a rebalancing in the economy were blunted by a worse-than-forecast performance in manufacturing, which grew by just 0.3 per cent in December.
And over the fourth quarter, the sector’s performance was also worse than had been estimated when the Office for National Statistics issued gross domestic product growth figures last month.
Earlier, European markets were little changed after German industrial production data disappointed.
Germany’s annual trade surplus reached an all-time high, but there are concerns Europe’s largest economy is relying too heavily on exports and not doing enough to encourage domestic demand.
The FTSE 100 is treading water ahead of the US January jobs update later – it’s up just 7 points at 6,565.3 in mid-morning trading.
The pause comes after a market rebound yesterday, when the top-flight index jumped 1.6 per cent. The Dow Jones in New York also posted a 1.2 per cent surge overnight in its best one-day increase so far in 2014.
In a quiet start to the latest session in London, Tate & Lyle rose after a ratings upgrade from JP Morgan Cazenove. Shares climbed 2 per cent, or 15.2p, to 776.2p.
Pharmaceuticals maker Shire was down after it said it was abandoning research into whether its hyperactivity drug could also be used as a treatment for depression, following trials. Shares were off 46p to 3095p.
Mobile phone operator Vodafone pared some of the gains made in the previous session when it had climbed 4 per cent after it hailed a strong performance in emerging markets. The stock was down 1.2p to 222.7p today.
In the FTSE 250 index, Vedanta Resources led the climbers after a vote of confidence from chairman Anil Agarwal as he bought 1.26million shares. They were up 5 per cent, or 43.2p, to 865.8p.
Craig Erlam, market analyst at Alpari, said: ‘It’s difficult to pinpoint what’s driven this improvement in sentiment over the last 24 hours, with economic data and earnings being relatively mixed.
‘In reality, the gains, while being the best since 18 December, are still relatively small compared with some of the losses recorded since the turn of the year. The Dow for example has made triple-digit losses on seven occasions since the start of the year. With this in mind, what we’re looking at here is probably more of a minor correction than a change in sentiment.
Regarding the keenly awaiting US non-farm payrolls jobs report, Erlam said: ‘This has been hugely built up over the last month, far too much in my opinion, as being a key indicator of whether the US recovery has stalled or if the poor figures in December were just weather related.
‘The only problem with this idea is that the weather in January was worse than it was in December, and has already been reflected in a number of figures that have already been released.
‘I don’t buy into the importance of this non-farm payrolls figure. If we see another number below 100,000, it won’t be ideal, but it won’t be the end of the world.
‘In reality, it will probably be offset by an upward revision in December’s figure and a very strong number once the weather settles down a little. That won’t stop people overreacting if we see it and panicking about the recovery.
‘We’ve seen plenty of signs already that the recovery is gathering momentum, such as the fourth quarter GDP figure which was 3.2 per cent and driven largely by the consumer, the housing market and business investment, while being slightly lower than it would have been due to a significant drop in government spending. That says far more than a couple of months of bad jobs reports during periods of unusually cold weather.’
The FTSE 100 has opened 6.2 points higher at 6,564.5 as investors anticipated further encouraging economic data from the US later.
Weekly jobless claims across the Atlantic came in lower than expected yesterday, raising expectations for today’s more influential US non-farm payrolls report for January.
The figures are forecast to show 185,000 jobs were added last month, according to a Reuters survey of economists. A number of this size would offer assurance that US economic growth was not starting to falter.
‘After what we saw yesterday we’re going slightly long into the data and if the figures are good we expect a nice short squeeze,’ said Markus Huber, senior trader at Peregrine & Black, referring to a situation where traders rush to close their negative bets on the market, helping push prices higher.
Max Cohen of Spreadex said: ‘For many investors who have been expecting the developed economies, especially the US, to lead the global economy this year, solid evidence of strong US job growth is vital to maintain conviction.
‘Relative calm in vulnerable emerging markets over recent days also helped to ease worries some emerging economies might suffer harsh downturns if capital flight continues. Battered currencies such as the Turkish lira and the South African rand are trading off their recent lows.’
Vodafone led a rally on the FTSE 100 yesterday as world markets bounced back from the recent heavy sell-off. The blue chip index closed up 100.4 points at 6558.3, a gain of 1.6 per cent.
Stocks to watch today include:
SSE: Trading statement.