Investors were choosing to take profits after the recent strong run in markets as caution set in ahead of today’s all-important jobs report, which will be a major factor in the Federal Reserve’s decision over tapering quantitative easing.

Elsewhere, Standard & Poor’s has cut France’s credit rating from AA+ to AA, around two years after its was stripped of its AAA status.

Back in the UK, water regulator Ofwat has blocked a proposed 8% price hike by Thames Water, saying it was unjustified.

Merlin Entertainments has valued the company at £3.2bn after pricing the shares at 315p each ahead of its floatation, which will see the sale of 30% of the theme park and attraction owner.

Meanwhile, Chief Exectuvie of carmaker Nissan, Carlos Ghosn, has warned that if the UK were to exit the European Union, the company would re-evaluation its investment here.

The US non-farm payrolls for October is expected to rise by 125,000, compared to an increase of 148,000 in September.

The unemployment rate is expected to rise to 7.3% in October from 7.2% after a partial government shutdown hurt the jobs market and economic growth.

The central bank has vowed to keep interest rates near zero until after the jobless rate drops below 6.5%, as long as inflation doesn’t exceed 2.5%.

Investors are closely watching economic data to weigh whether the Fed might announce a tapering of its monthly $85bn bond buying programme this year.

Also acting as a backdrop to today will be the release of the University of Michigan’s sentiment index for November which is expected to rise to 74.5 from 73.2 the prior month.

Rolls-Royce shares jumped after it said it expects the full year to achieve modest growth in underlying revenue and underlying profit with cash flow around breakeven, according to a trading update out this morning. However, the engine manufacturer has changed its underlying profit guidance in its Defence Aerospace business from broadly flat to modest growth and in Marine from modest growth to broadly flat.

International Consolidated Airlines Group (IAG) also charged higher after it delivered a “strong” set of third quarter results which showed British Airways performance had taken off aided by the bounce back from the Olympics effect last year. The airlines group reported three month pre-tax profit had soared to €609m from €237m last time after revenues rose 6.9% to €5.4bn and costs fell 1.5%. Third quarter passenger unit revenue was up 6.7%.

Balfour Beatty, the FTSE 250 infrastructure group, has announced that its 50%-owned joint venture, Gammon Construction, has won two significant rail contracts in Singapore. The Land Transport Authority has awarded an £87m contract for the design and construction of the Mayflower Station on the underground Thomson Line, while SMRT Trains has awarded a £61m contract for track system replacement on the North-South Line.

Source: ShareCast