London stocks drifted lower on Friday as the resurgent pound lifted to its highest against the dollar since August.
The FTSE 100 received a boost from DS Smith’s rise after it agreed a takeover by rival Mondi but it was not enough to drive the index into positive territory.
London’s top flight closed 32.72 points, or 0.43%, lower to end the day at 7,659.74.
European equity markets continued their tepid start to the month, with many traders opting to focus their investments in the US.
Higher-than-expected February unemployment data from the US drove some analysts to predict interest rate cuts could come as soon as June, boosting the fortunes of the main US markets.
Chris Beauchamp, chief market analyst at IG, said: “Once again US stocks are rallying while the FTSE 100 and other European markets are left behind.
“Today’s jobs figure is perhaps one of those hoped-for Goldilocks moments – just enough signs of weakness to spur hope of rate cuts, but also a solid headline jobs number to underline the overall strength of the US economy.
“Compared to the anaemic growth outlooks for the UK and the eurozone, it is not surprising to see US stocks in favour once more.”
In Europe, the German Dax index was down 0.16% at the close but the Cac 40 closed up 0.15%.
The increased hope of rate cuts in the US hit the value of the dollar.
As a result, the pound was up 0.32% at 1.285 US dollars and was 0.39% higher at 1.174 euros at market close in London.
In company news, DS Smith was the top performer on the FTSE 100 after it agreed a deal with rival Mondi to create a £10 billion packaging giant.
The deal, confirmed after markets closed on Thursday, will see Mondi shareholders own 54% of the enlarged group, with DS Smith’s investors owning the remaining 46%.
As a result, DS Smith lifted by 16.8p to 342p at the close. However, Mondi shareholders were less impressed, with its stock slipping by 31.5p to 1,348.5p.
Meanwhile, Mike Ashley’s retail vehicle Frasers Group was just in the red after it said its Matches Fashion brand will enter administration, only three months after buying the business for £52 million.
Matches, which according to its latest accounts employed a little under 700 people, was making “material losses” and was “consistently” missing its target, Frasers said.
Shares in the group, which also owns Sports Direct, were down 2p to 804p on Friday.
Mattioli Woods shares soared during the session after the wealth manager became the latest London-listed to strike a deal to be taken private.
Shares in the business finished up 194p at 794p after it agreed a £432 million takeover deal by Pollen Street Capital.
Meanwhile, the price of a barrel of Brent crude oil was down by 0.94% to 81.51 US dollars as markets were closing in London.
The biggest risers on the FTSE 100 were: DS Smith, up 16.8p to 342p; ConvaTec, up 10.4p to 286p; Legal & General, up 4.8p to 249.6p; Aviva, up 8.3p to 470.5p; and BT, up 1.9p to 109.4p.
The biggest fallers on the FTSE 100 were: Entain, down 43p to 747p; Melrose Industries, down 15.4p to 602p; Rentokil, down 12.2p to 492p; Mondi, down 31.5p to 1,348.5p; and GSK, down 38.2p to 1,673p.