Tullow Oil was providing a lift in London on speculation that it could be a takeover target, while retailers were still in focus in the aftermath of a busy day for the sector yesterday.

The FTSE 100 gained 0.5% in early trading to around 6,726.

Eyes on Fed ahead of jobs report

Figures from ADP released Wednesday showed that the American economy added significantly more jobs than expected in December, suggesting that there could be some upside risk to the official jobs figures due to be released this afternoon.

The consensus of analysts expect the Bureau of Labor Statistics data to reveal a 195,000 increase in non-farm payrolls in December, down slightly from the 203,000 gain the month before. The unemployment rate is estimated to remain at 7%.

The Federal Reserve kicked off its staged withdrawal of stimulus last month in the face of an improving labour market, tapering its monthly asset purchase programme from $85bn to $75bn.

Michael Hewson, Chief Market Analyst at CMC Markets, said that “good” payrolls number today will “shift the markets attention to the Fed meeting at the end of this month and the potential for a further $10bn of tapering on top of this month’s $10bn”.

Tullow gains on M&A rumours

Bid speculation surrounding Tullow gave the oil stock a lift this morning after rumours did the rounds yesterday that Norwegian group Statoil is considering an offer for the firm. Tullow had a strong day yesterday after an upgrade from HSBC to ‘buy’.

BP was among the worst performers after Exane BNP Paribas downgraded the oil major to ‘neutral’, while at the same time lifting its rating for Shell to ‘outperform’.

The retail sector was still in focus after yesterday’s poor showing by supermarket giants Tesco and Morrison. Morrison bounced back slightly today, while Tesco was still under the weather; both stocks were downgraded by Beaufort Securities this morning to ‘sell’.

Marks & Spencer, which rose strongly yesterday after its quarterly sales update, was extending gains, helped by upbeat comments from Citigroup this morning which said it forecasts double-digit earnings growth net year for the retailer.

Sportswear retailer JD Sports was in demand after saying that it is on track to hit profit targets after a strong Christmas, with like-for-like sales “marginally ahead” of last year. Rival chain Sports Direct also edged higher.

Telecoms group Vodafone was up after a sharp fall yesterday afternoon, on reports that US counterpart AT&T is looking to buy mobile network operator Orange. The speculation effectively implies that AT&T would drop out of its rumoured pursuit of Vodafone.

Digital media group Perform surged early on as investors welcomed the resignation of Chief Financial Officer David Surtees following a profit warning by the company last month.

Chip designer ARM Holdings, which got hit by a Deutsche Bank downgrade yesterday, was still under selling pressure this morning after analysts at Goldman Sachs decided to take the company off its ‘conviction buy’ list.

FTSE 100 – Risers

Tullow Oil (TLW) 875.00p +3.55%
IMI (IMI) 1,569.00p +2.68%
Capita (CPI) 1,048.00p +2.54%
Royal Dutch Shell ‘A’ (RDSA) 2,183.00p +1.77%
Coca-Cola HBC AG (CDI) (CCH) 1,800.00p +1.75%
Burberry Group (BRBY) 1,445.00p +1.69%
Persimmon (PSN) 1,294.00p +1.57%
Glencore Xstrata (GLEN) 314.35p +1.52%
Royal Dutch Shell ‘B’ (RDSB) 2,298.00p +1.48%
Sports Direct International (SPD) 753.00p +1.48%

FTSE 100 – Fallers

Fresnillo (FRES) 663.00p -1.71%
ARM Holdings (ARM) 980.50p -1.70%
Lloyds Banking Group (LLOY) 84.18p -1.27%
BP (BP.) 489.65p -1.14%
Whitbread (WTB) 3,858.00p -0.67%
Tesco (TSCO) 322.20p -0.66%
Rolls-Royce Holdings (RR.) 1,240.00p -0.64%
Aberdeen Asset Management (ADN) 447.40p -0.49%
International Consolidated Airlines Group SA (CDI) (IAG) 426.70p -0.44%
Shire Plc (SHP) 2,895.00p -0.41%

Source: ShareCast