European Stock Markets Edge Higher Before Payrolls Data

UBS analysts join a backlash against the U.K. home builder selloff.
By Laura Board ,

European stocks edged higher on Friday before critical payrolls figures from the U.S. as data showed U.K. consumer confidence slumped after the Brexit vote.

A Gfk confidence survey to capture the impact of the Brexit vote on British consumers led to its index dropping by eight points to minus nine, the biggest slide in more than 21 years.

Meanwhile, in Germany May imports rose by a disappointing 0.1% on the month - analyst had been looking for 0.4% growth - and exports fell a bigger-than-expected 1.8%. Eurozone policymakers and central bankers are relying on strengthening consumer demand in Germany to offset a downturn in global trade.

In early trading the FTSE 100 was up 0.17% at 6,545.08. In Frankfurt the Dax rose 0.47% to 9,463.10 and in Paris the Cac 40 gained 0.19% to 4,125.81.

S&P 500 mini futures were up 0.16%.

Brent oil was recently up 0.94% at $46.84, though both gold and silver slipped back.

European government bond yields were stable in Germany and the U.K., fell in Europe's other main economies and were up 4 basis points at 7.79% in Greece. The 10-year government bond yield in German was recently unchanged at minus 0.17%.

The pound was recently up 0.27% against the dollar at $1.2943.

In the U.K. retail stocks were mixed after the GfK report, with Sports Direct International down more than 5% after rising sharply on Thursday on the company's suggestion of a share buyback.

Home builder Taylor Wimpey led the FTSE 100 higher, rising more than 4% as the sector built on Thursday's gains. CEO Peter Redfern told broadcaster ITV that the company has traded normally since the U.K.'s Brexit vote and "the phone hasn't stopped ringing." Developers including British Land also edged higher after rising sharply on Thursday.

After bullish commentary from Macquarie analysts on Thursday, UBS echoed similar sentiments.

"We believe the housebuilders look oversold and price-in nearly 10% house price deflation. Expect more volatility, but we see an attractive entry point," the analysts said.

Johnston Press (JHPSF) rose 1.8% after the circulation for its recently acquired i newspaper exceeded expectations. Liberum Capital rates the stock a buy.

In Frankfurt packaging maker  Gerresheimer  rose more than 1% to Sfr71.84  ($73.41) as Credit Suisse lifted its target price to Sfr77, up from Sfr70.

Also in Frankfurt Fresenius Medical Care (FMS) - Get Report was up about 1% after Jefferies upgraded its recommendation to hold from underperform.

Asian benchmarks  ended the week mainly in the red, as the yen hovered near its highest point against the dollar in more than two years.

The Nikkei 225 closed at 15,106.98, down 1.11% on the day and 3.7% on the week.

The so-called Economy Watchers survey of business confidence in Japan, the first to reflect the mood after the U.K.'s Brexit vote, dropped more than expected, with the outlook index dropping the most since March 2013.

The yield on the 10-year Japanese government bond was recently down 1 basis point at minus 0.29%.

Japan holds elections for the upper house of parliament this weekend, with Prime Minister Shinzo Abe needing to secure a two-thirds majority for his coalition to push through his reforms.

The Hang Seng closed down 0.67% at 20,567.26.

On mainland China the CSI 300 composite slipped 0.55% to 3,192.28.

Non-farm payrolls data is expected to show the U.S. economy added about 180,000 in June jobs after unexpectedly weak growth in May.

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