Early market roundup: FTSE 100 subdued before payrolls; VW revs higher

London stocks were little changed early Friday as investors awaited the latest US jobs report for clues on the Federal Reserve's next interest rate move.

Stocks in Europe had received a boost on Thursday as expectations of an imminent rate hike by the Fed eased, with some of that optimism filtering into Asian trade on Friday.

Over in Frankfurt, meanwhile, there was impetus from Volkswagen which announced deeper job cuts.

The FTSE 100 index opened down 14.27 points, 0.1%, at 10,817.25. The FTSE 250 added 38.35 points, 0.2%, at 24,534.48, and the AIM all-share was down 0.99 points, 0.1%, at 798.82.

The Cboe UK 100 was down 0.1% at 1,074.63, the Cboe UK 250 rose 0.1% at 21,332.08, and the Cboe small companies was flat at 18,951.39.

The CAC 40 in Paris lost 0.2%, while Frankfurt's DAX 40 edged up 0.1%.

Sterling traded at USD1.3542 early Friday, up from USD1.3536 at the time of the London equities close on Thursday. Against the euro, it bought EUR1.1643, down slightly from EUR1.1646.

The single currency was steady against the dollar at USD1.1626. Versus the yen, the buck advanced to JPY156.37 from JPY155.54. It had traded as low as JPY155.30 on Thursday on intervention chatter.

The yield on the US 10-year Treasury was quoted at 4.76% early Friday, widening slightly from 4.75% at the time of the London equities close on Thursday. The yield on the US 30-year Treasury stretched to 5.25% from 5.23%.

Commerzbank analyst Thu Lan Nguyen commented: "The outlook for US interest rates remains highly uncertain. Today's labour market report may help shed some light on the situation, but it is unlikely to provide a definitive picture. That uncertainty was underscored yesterday by comments from Federal Reserve Governor Christopher Waller. In his view, a rate hike is by no means necessary. He also confirmed what we have been arguing: next week's inflation data are likely to be the key input for the Fed's upcoming policy decision, further reducing the significance of today's employment report.

"Markets have already scaled back their rate expectations somewhat in response to Waller's remarks. However, it is important not to overlook the context. While Waller was long regarded as one of the more hawkish members of the FOMC, he had adopted a comparatively dovish stance more recently, ie he was among the earliest supporters of rate cuts before the outbreak of the Iran conflict. Against that backdrop, his latest comments may not be particularly surprising."

Ahead of Friday's nonfarm payrolls at 1330 BST, the odds of a Fed hike later this month currently stand at around 50%. But that probability was as high as 63% on Thursday, before Waller's remarks.

According to consensus cited by FXStreet, Friday's official data is expected to show the US added 56,000 jobs in August, after shedding 23,000 in July.

ING analysts commented: "The unemployment rate is expected to remain low at 4.1%, which the Fed sees as close to full employment. True, another negative jobs number today would make the optics of the Fed hiking rates later this month a little harder – but the lasting impact for financial markets should come from inflation rather than labour market data.

"And barring a very strong NFP number today, which would firm up a September rate hike, we could see the dollar drifting a little lower."

An ounce of gold traded at USD4,468.26, down from USD4,506.91 late Thursday. Brent fell to USD95.70 a barrel from USD96.83.

Tokyo's Nikkei 225 rose 1.3%. In China, the Shanghai Composite closed 0.3% lower, while the Hang Seng Index in Hong Kong was 1.9% higher. Sydney's S&P/ASX 200 ended down 0.2%.

In the US on Thursday, Wall Street ended higher, with the Dow Jones Industrial Average up 1.2%, the S&P 500 up 1.1% and the Nasdaq Composite up 1.4%.

In London, telecommunications firm Vodafone rose 1.6%. Goldman Sachs raised it to 'buy' from 'sell'.

Coca-Cola Europacific fell 1.2% after JPMorgan reinitiated coverage of the soft drink bottler with an 'underweight' rating.

Elsewhere in London, fintech Fiinu surged 20%. Manx Financial Group rose 4.8%.

Fiinu said its partnership with Manx unit Conister Bank has been strengthened.

"Fiinu and Conister Bank have agreed an important addendum to their existing master services agreement governing the implementation, deployment and production environment of Fiinu's Plugin Overdraft platform, which Fiinu believes to be the world's first unbundled overdraft solution," Fiinu said.

"The addendum strengthens the parties' strategic and commercial relationship and formalises the updated implementation arrangements, including the implementation timetable, and long-term commercial framework, as the partnership progresses towards launch and has now moved into the production environment."

The move into production "represents a significant milestone in the commercialisation" of the Plugin Overdraft offering.

Manx, meanwhile, hailed "strong operational growth despite challenging macroeconomic conditions" in the first half of the year.

"Conister Bank continued to deploy liquidity efficiently, Payment Assist increased lending volumes, expanded its partnerships and broadened its product offering, and we began implementing the AI strategy announced at our AGM. These developments strengthen the group's earnings potential, improve operating efficiency and support our objective of delivering sustainable long-term value for shareholders," CEO Douglas Grant said.

Over in Frankfurt, Volkswagen shares raced 5.1% higher. The carmaker said late Thursday that management and unions had agreed to cut a further 50,000 jobs by the end of the decade, bringing total job losses to 100,000.

"It is essential to systematically align workforce levels with economic realities," the 10-brand group said in a statement.

The firm had approved a plan which involved "the reduction of around 50,000 jobs" on top of the 50,000 already agreed, it added.

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