UKX FTSE 100 Index

By Carla Mozee, MarketWatch

U.K. industrial production slows

U.K. blue-chip stocks pushed modestly higher Friday, gathering strength alongside U.S. stocks after monthly hiring figures stateside showed the labor market in the world's largest economy expanded at a stronger pace than anticipated.

U.K. stocks had earlier been struggling to keep up a run of wins, as mining shares grappled with the prospect of U.S. tariffs on steel imports.

How markets are moving

The FTSE 100 index rose 0.2% to 7,220.67 after darting between small gains and losses earlier in the session. On Thursday, the benchmark rose 0.6% (http://www.marketwatch.com/story/european-stocks-rise-for-4th-day-in-a-row-as-ecb-steals-focus-from-us-tariffs-2018-03-08) and marked a fourth straight day of gains. For the week, the FTSE 100 was on course to rise 2.1%, which would be the first weekly win in three weeks.

The pound bought $1.3849, up from $1.3812 late Thursday in New York.

What's driving markets

London-listed shares climbed with U.S. and European stocks after data showed the U.S. economy added 313,000 new jobs in February (http://www.marketwatch.com/story/us-adds-313000-jobs-in-february-in-biggest-gain-in-a-year-and-a-half-2018-03-09). That outstripped expectations of 222,000 in a MarketWatch poll of economists. February's figure signaled that the U.S. economy has room to keep expanding. The U.S. is a key business and consumer market for many London-listed companies.

However, wage growth moderated, and that could tamp down worries among investors that rising pay will lead to higher inflation and prompt the Federal Reserve to raise interest rates more than the market has anticipated.

U.K. stocks had been choppy after largely lackluster U.K. economic data for January, and after U.S. President Donald Trump late Thursday signed a decree to impose tariffs of 25% on imported steel and 10% on aluminum. But Canada and Mexico were exempted from the levies as the U.S. attempts to renegotiate the North American Free Trade Agreement.

Read:EU lines up its salvos to fight Trump tariffs (http://www.marketwatch.com/story/eu-lines-up-its-salvos-to-fight-trump-tariffs-2018-03-08)

"We hope we can get confirmation that the EU is excluded from this," said European Union Trade Commissioner Cecilia Malmstrom on Friday at a forum in Brussels. The tariffs will go into effect March 23. While the EU shares concerns about overcapacity in the steel market, "this isn't the right way" to deal with the issue, she said.

See:ECB's Draghi: 'If you put tariffs against your allies, one wonders who the enemies are' (http://www.marketwatch.com/story/ecbs-mario-draghi-if-you-put-tariffs-against-your-allies-one-wonders-who-the-enemies-are-2018-03-08)

And check out: EU leader responds to Trump's tariff plan: 'We can also do stupid' (http://www.marketwatch.com/story/eu-leader-responds-to-trumps-tariff-plan-we-can-also-do-stupid-2018-03-07)

What strategists are saying

-- "For a labor market that we are told is rather tight this is quite a big number and the fact that we saw wage growth slow to 2.6% from 2.9% would suggest that there is much more slack in this particular jobs market than most people think," said Michael Hewson, chief market analyst at CMC Markets, in a note.

"This would suggest that those calls for four rate rises this year may well be a little bit premature, particularly when you see the participation rate jump from 62.7% to 63%, as more people return to the workforce. This is likely to prompt a little bit of a brake on the U.S. dollar rebound we've seen this week," he added.

-- "February's fall in average wage rise data takes some of the pressure off [the Fed]. But the creation of more than 300,000 jobs in February suggests it will return in the months to come," said James Ingram, investment manager at MB Capital, in an note. "Throw in a potential trade war between the U.S. and the EU and the U.S. economy could be headed for a perfect inflationary storm later this year," he added.

Stock movers

Miners shrugged off earlier weakness that came following the news of the tariffs. Iron ore producers Rio Tinto PLC (RIO) (RIO) (RIO) and BHP Billiton PLC (BLT.LN) (BHP.AU) (BHP.AU) turned higher to trade up 0.9% and 1.9%, respectively, and Antofagasta PLC (ANTO.LN) flipped up to rise 1.6%.

Investec upgraded miners Anglo American PLC (AAL.LN) and Glencore PLC (GLEN.LN) to buy from hold. Shares were up 1.8% and 0.9%, respectively.

Among companies that have significant revenue exposure to the U.S., equipment-rental provider Ashtead PLC (AHT.LN) rose 2.1% and luxury goods maker Burberry Group PLC (BRBY.LN) (BRBY.LN) picked up 1.4%.

GKN PLC (GKN.LN) rose 1.1% after the engineering company reached a deal to combine its Driveline automobile business with Dana Inc (http://www.marketwatch.com/story/gkn-merging-auto-unit-in-61-billion-deal-2018-03-09). (DAN) in a deal valued at about $6.1 billion.

Economic data

U.K. industrial production expanded by 1.3% in January, slightly slower than an expected 1.5% reading in a FactSet poll of analysts. The Office for National Statistics said manufacturing production rose 0.1% in January, marking a ninth consecutive month of expansion, but that fell somewhat short of expectations of 0.2% growth. Construction output contracted 3.4% in January.

Meanwhile, the U.K.'s total trade deficit widened by GBP3.4 billion to GBP8.7 billion in the three months to January, driven largely by a decline in fuel exports and an increase in fuel imports. Stripping out commodities, the deficit widened by GBP2.6 billion to GBP8.9 billion.

(END) Dow Jones Newswires

March 09, 2018 10:16 ET (15:16 GMT)

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