LONDON MARKETS: FTSE 100 Closes At 3-week High As Oil Tries For Rebound

By Carla Mozee, MarketWatch Features Dow Jones Newswires

Pearson shares soar; M&S names new chairman

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U.K. stocks closed higher Friday, as oil prices came fighting back from heavy losses, and as investors priced in expectations of a market-friendly outcome in France's presidential election on Sunday.

The FTSE 100 index , a commodity-sensitive benchmark, closed up 0.7% at 7,297.43, its highest finish since April 13. The London benchmark had opened lower, pulled down by a decline for oil shares as crude prices fell nearly 1%.

But crude-oil prices staged a turnaround after slumping to five-month lows, hit by expectations for a recovery in Libyan crude production and a rise in U.S. output.

Those moves helped swing shares of oil producer BP PLC (BP.LN) (BP.LN) higher, closing up by 1.5%. Royal Dutch Shell PLC (RDSB.LN) (RDSB.LN) climbed by 2.7%. The oil group makes up 14% of the FTSE 100's weighting.

But oil prices were still facing hefty losses for the week, with WTI futures on track to fall nearly 7%.

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Read:OPEC faces high-stakes decision as oil drops for the week (http://www.marketwatch.com/story/opec-faces-high-stakes-decision-as-oil-drops-to-5-month-low-2017-05-04)

London-listed shares started showing solid gains after the U.S. jobs report. The bigger-than-expected 211,000 new hires in April (http://www.marketwatch.com/story/us-creates-211000-jobs-in-april-as-hiring-rebounds-2017-03-10) indicated the world's largest economy is still on its growth course, and that bodes well for global growth expectations.

"U.S. markets have failed to match the enthusiasm shown by U.K. traders, displaying the reticence that has prevailed for the past two weeks," said Chris Beauchamp, chief market analyst at IG, in a Friday note. "Non-farm payrolls this month were comfortably ahead of forecasts, and indeed have gone a long way to reversing the concerns displayed after last month's poor number, but the downward revision to the previous figure has provided another point of concern," he said.

The pound rose to $1.2956 from $1.2924 late Thursday. Equities still managed to gains even as the pound strengthened. A stronger sterling can clip shares of multinational companies that make the bulk of their earnings and revenue overseas.

For the week, which was shortened by Monday's Bank Holiday, the FTSE 100 rose 1.3%.

This coming Thursday, the Bank of England is likely to hold its key interest rate at 0.25%.

French focus: U.K. stocks marched up alongside European equities (http://www.marketwatch.com/story/european-stocks-fall-from-21-month-high-ahead-of-us-jobs-french-election-2017-05-05), which closed at a 21-month high. France's CAC 40 rose 1.1%, with investors pricing in expectations that independent centrist Emmanuel Macron will prevail against far-right euroskeptic Marine Le Pen in Sunday's presidential race.

A "Macron victory will see [the euro] rise across the board with euro-dollar and euro-pound targeting 1.1050 and .8650, respectively. This is because the market will breathe a sigh of relief by moving past a divisive figure like Le Pen," said Rahul Khanna, FX strategist at TraderMade, in a note.

"A (highly unlikely) victory for Le Pen will see a mass exodus of capital into safe havens as the market will turn its focus on a possible weakening of the euro-area," he said.

The euro was off 0.2% against the pound, at 84.84 pence.

See: Brace for market mayhem if Le Pen unexpectedly wins French presidency (http://www.marketwatch.com/story/brace-for-market-mayhem-if-le-pen-unexpectedly-wins-french-presidency-2017-05-04)

Also: European shares are a buy -- but watch for this Trump risk: Eaton Vance (http://www.marketwatch.com/story/european-equities-a-buy-but-trump-policy-inaction-a-risk-eaton-vance-2017-05-03)

Stock movers: Pearson PLC shares (PSON.LN) soared 12.4% after the education and publishing company said it would launch a review of its struggling U.S. learning-products business (http://www.marketwatch.com/story/pearson-shares-surge-on-us-review-cost-cut-plan-2017-05-05) and announced more cost savings.

International Consolidated Airlines Group SA (IAG.LN) climbed 5.5% after the British Airways said first-quarter operating profit rose slightly to 170 million euros (http://www.marketwatch.com/story/iag-profit-edges-higher-on-lower-fuel-costs-2017-05-05). The company also stuck to its outlook for an improvement in operating profit this year.

See:European airlines take off after upbeat IAG, easyJet numbers (http://www.marketwatch.com/story/no-pr-disasters-here-european-airlines-take-off-after-upbeat-iag-easyjet-numbers-2017-05-05)

Shares of EasyJet PLC (EZJ.LN) gained 4.2% after the company posted an 11.7% rise in passenger numbers in April.

Smith & Nephew PLC (SN.LN) rose 2.8% after the medical devices maker backed its full-year outlook (http://www.marketwatch.com/story/smith-nephew-revenue-unchanged-2017-05-05) even as first-quarter revenue was flat.

Marks & Spencer Group PLC (MKS.LN) popped up 5% after the department-store operator named Archie Norman as its new chairman (http://www.marketwatch.com/story/marks-spencer-names-norman-as-non-exec-chairman-2017-05-05), with effect from Sept. 1. Norman has served as the chief executive of Asda, which is Wal-Mart Stores Inc.'s (WMT) British arm.

(END) Dow Jones Newswires

May 05, 2017 13:21 ET (17:21 GMT)