The spotlight was back on US economic data on Thursday with markets ending flat as investors looked ahead to the next policy meeting at the Federal Reserve.
The FTSE 100 finished just 0.55 points higher at 6,588.98. Nevertheless, this was still the third straight day in positive territory for London's benchmark index, which finished at its highest closing level since August 13th when it reached 6,611.94.
Ronnie Chopra, Head of Strategy at Tradenext, said that the key 6,600 level "has been a barrier in recent sessions".
Weighing on sentiment today was the news that factory output in the Eurozone dropped by 1.5% compared to a small increase in June. This was much worse than the 0.3% decline expected by analysts with figures from Germany, Europe's largest economy, showing a 2.3% decline in industrial production.
FOMC in focus after jobless claims
Initial US weekly unemployment claims dropped by 31,000 in the week ended on September 7th to 292,000 - their lowest level since April of 2006. The consensus estimate had been for a reading of 323,000. Employment data has been closely watched in recent months after Fed Chairman Ben Bernanke said back in May that he was looking for a decent recovery in the labour market before beginning the 'tapering' of quantitative easing.
However, markets gave a subdued reaction to the numbers today after the Labor Department said that work carried out on computer systems in two states caused those employment agencies to report fewer applications. Financial Sales Trader Lee Mumford from Spreadex said that the figures "should be taken with a pitch of salt".
Traders seem reluctant to take on too much risk ahead of the Federal Open Market Committee meeting next week, especially after last Friday's worse-than-expected US jobs report which cast doubt over the outlook for monetary policy. Markets are hoping that policymakers might wait until later on in the year before pulling the plug on stimulus, as they await stronger signs of a recovery.
Syria agrees to hand over chemical weapons
Developments in Syria were continuing to catch investors' eyes today as President Bashar al-Assad confirmed that he will agree to Russia's plan to place chemical weapons under international control. He made the announcement on Russian TV's Rossiya 24 as US and Russian foreign ministers prepared to meet in Geneva to discuss the proposal.
Russian President Vladimir Putin yesterday called on the US not to intervene in Syria, especially if action is not approved by the United Nations first, given that it could lead to more violence and "unleash a new wave of terrorism". US intelligence says that Assad's regime was behind the attacks last month that killed around one and a half thousand people.
In a rare direct appeal in The New York Times, Putin said: "The potential strike by the United States against Syria, despite strong opposition from many countries and major political and religious leaders, including the pope, will result in more innocent victims and escalation."
FTSE 100: AMEC walks away; Morrisons rises after H1 results
AMEC was a high riser today after saying that it is considering additional cash returns in the fourth quarter after walking away from making a firm offer for FTSE 250 engineering peer Kentz Corporation. The company also said that it continues to see "attractive opportunities to extend its geographic footprint in the growth regions".
Supermarket group Morrisons was on the rise after a broadly in-line set of first-half results. Profits fell 21.8% to £344m while total turnover was flat at £8.9bn. Analysts at Jefferies said it was a "mixed" first half, but an "undemanding valuation and a clear reduction in capes intensity from here onwards point to an improving outlook".
Fashion retailer Next edged higher after it hiked its interim dividend payout after driving up half-year profits by 8.2% despite a fall in sales. The company said it was able to sell more clothes at full price and few clothes in its sale.
Among the fallers was temporary power and temperature control group Aggreko after Deutsche Bank lowered its target price for the stock from 2,100p to 1,870p. The bank kept its 'buy' rating but said that it now expects underlying profits to be flat next year.
Industrial group Melrose was also in the red after Citigroup downgraded the stock to 'neutral' on valuation grounds after a strong outperformance so far this year. The bank said: "While we continue the see attractions on a long-term view, driven by a management team, which has strong record of creating value, we believe the near-term catalysts are appropriately captured in today's share price."
Meanwhile, SABMiller was taken down a peg by Nomura which cut its rating to 'reduce'. The broker said that the exceptional profit growth across the industry since 2005 is "unlikely to be matched".
Silver and gold prices
were heading lower today, causing shares
of precious metals producers Randgold and Fresnillo to take a hit.
FTSE 250: Dialight and Kentz provide a drag
Delays in the signing of large contracts has forced industrial lighting group Dialight to warn that profits will be flat for the full year, causing shares to drop sharply today.
Kentz was also a heavy faller after AMEC said it would not make a firm offer for the company after its £700m proposal was rejected. Kentz Chief Executive Christian Brown said: "I would like to take this opportunity to reiterate our focus on delivering value to our shareholders. Naturally, while we have every confidence in our ability to deliver further value to our shareholders as an independent company, the board fully understands its responsibilities to all our shareholders."
FTSE 100 - Risers
Amec (AMEC) 1,078.00p +1.89%
Morrison (Wm) Supermarkets (MRW) 302.50p +1.78%
Glencore Xstrata (GLEN) 343.65p +1.37%
William Hill (WMH) 424.10p +1.22%
Sainsbury (J) (SBRY) 400.80p +1.19%
Severn Trent (SVT) 1,736.00p +1.17%
AstraZeneca (AZN) 3,195.00p +1.06%
Royal Bank of Scotland Group (RBS) 360.40p +0.95%
British Sky Broadcasting Group (BSY) 857.50p +0.94%
BAE Systems (BA.) 446.70p +0.93%
FTSE 100 - Fallers
Randgold Resources Ltd. (RRS) 4,496.00p -2.56%
Aggreko (AGK) 1,610.00p -2.48%
Antofagasta (ANTO) 864.00p -2.48%
IMI (IMI) 1,477.00p -1.99%
Fresnillo (FRES) 1,194.00p -1.97%
Melrose Industries (MRO) 307.00p -1.82%
Compass Group (CPG) 842.50p -1.35%
Legal & General Group (LGEN) 197.20p -1.30%
Pearson (PSON) 1,275.00p -1.24%
Resolution Ltd. (RSL) 323.40p -1.13%
FTSE 250 - Risers
Home Retail Group (HOME) 172.70p +5.37%
Perform Group (PER) 570.00p +4.11%
Playtech (PTEC) 720.00p +2.49%
Evraz (EVR) 137.10p +1.63%
Essar Energy (ESSR) 138.20p +1.62%
Derwent London (DLN) 2,349.00p +1.56%
Countrywide (CWD) 558.00p +1.45%
International Public Partnerships Ltd. (INPP) 126.50p +1.44%
United Drug (UDG) 339.20p +1.41%
Shaftesbury (SHB) 593.00p +1.37%
FTSE 250 - Fallers
Dialight (DIA) 1,150.00p -16.36%
Kentz Corporation Ltd. (KENZ) 499.00p -9.19%
Bumi (BUMI) 200.10p -6.80%
Centamin (DI) (CEY) 44.50p -3.68%
ITE Group (ITE) 279.40p -3.66%
Sports Direct International (SPD) 705.00p -3.29%
Salamander Energy (SMDR) 120.90p -3.28%
Pace (PIC) 273.20p -2.91%
Euromoney Institutional Investor (ERM) 1,150.00p -2.87%
Oxford Instruments (OXIG) 1,330.00p -2.85%