London shares climbed on Thursday after weaker than expected US employment data fuelled hopes that the Federal Reserve may be nearing the end of its interest rate tightening cycle, sending investors back into equities across Europe.
The FTSE 100 finished 1.7% higher at 10,652.87, while the FTSE 250 added 0.4% to close at 23,417.58. The upbeat mood spread across the continent, with France’s CAC 40 gaining 1.7% and Germany’s DAX 40 jumping 2.2%.
Investor sentiment shifted following the latest US labour market report, which showed employers added just 57,000 jobs in June, well below expectations for around 110,000.
The previous two months were also revised sharply lower, with May’s payroll figure cut to 129,000 from an originally reported 172,000 and April revised down to 148,000 from 179,000. Despite slower hiring, the unemployment rate edged down to 4.2% from 4.3%, against forecasts for no change.
The softer employment figures encouraged investors to scale back expectations of another near-term US interest rate increase, prompting a broad rally in European equities even as Wall Street produced a mixed performance.
The Dow Jones Industrial Average rose more than 600 points towards fresh record highs, while the S&P 500 traded little changed and the Nasdaq slipped as weakness in chip stocks continued.
Defence companies were among London’s strongest performers, with Babcock International and BAE Systems both climbing 5.5%, while fellow sector specialist Qinetiq gained 7.1% on the FTSE 250.
Pharmaceutical heavyweights also provided support, with AstraZeneca advancing 4.9% and GSK rising 3.8%, while Guinness owner Diageo added 3.6% as investors rotated into some of the market’s largest defensive names.
Capricorn Energy was the standout gainer after agreeing to a $360 million takeover by London-based Genel Energy. Capricorn surged 20% after accepting an offer worth $4.74 per share, equivalent to 357p, comprising $3.75 in cash alongside an intended special dividend of $0.99.
To the downside, PPHE Hotel Group dropped 4.2% after confirming it was no longer in discussions with any potential buyer that its board considered capable of completing a deal. The update follows last month’s decision by Fattal Hotels to abandon a possible £22-a-share bid after opposition from major shareholder Euro Plaza Holdings. Although PPHE had previously disclosed interest from another party, it said it is no longer in receipt of any approach.
Baltic Classifieds also came under pressure, falling 5.8% after issuing revenue growth guidance of around 10% for 2027, below market expectations of 13%. The online classifieds operator nevertheless said it intends to seek shareholder approval to repurchase up to a further 15% of its issued share capital, having already bought back 10% by the middle of June.