UKX FTSE 100 Index

By Carla Mozee, MarketWatch

Retailers advance after January data

U.K. stocks slumped Friday while the pound retreated against the U.S. dollar on the heels of a closely watched U.S. jobs report, which dragged U.S. stocks down.

The FTSE 100 closed down 0.9% at 5,848.06, after a choppy session where stocks briefly held to a gain in the wake of the jobs data. The index dropped 3.9% on the week, breaking two previous weeks of advances and marking its worst week in about a month.

Investors struggled to interpret the jobs data, with some strategists and investors indicating that the report might leave open the possibility of a rate increase by the U.S. Federal Reserve, while others believing that it confirmed growing weakness in the world's largest economy.

The possibility that a rate increase by the Fed might still happen at its next policy meeting in March delivered a jolt to the dollar against its main rivals.

After the jobs report, "it's been a bit of a mixed response generally across markets but there is dollar strength. Equity markets are not entirely certain how to take it [with] very choppy moves," said Richard Perry, market analyst at Hantec Markets.

During afternoon trade, the U.S. Labor Department's January report (http://www.marketwatch.com/story/us-jobs-growth-slows-to-151000-as-jobless-rate-hits-eight-year-low-2016-02-05) showed nonfarm payrolls rose by a less-than-anticipated 151,000 jobs. But the unemployment rate dropped to an eight-year low of 4.9% and average hourly wages surged 0.5% to $25.39 an hour.

"The headline number obviously matters but the market is certainly looking out for those hourly earnings picking up and feeding into inflation," Perry said. "The market had probably backed itself into thinking there was going to be a weak report and the actual report has been a bit better than that and that's why the dollar has strengthened."

The pound hit an intraday low of $1.4452, according to FactSet data, after the data. Late Thursday, it bought $1.4590. Read more in Currencies (http://www.marketwatch.com/story/dollar-could-hit-115-if-jobs-data-disappoints-analyst-2016-02-05).

Miners: Mining shares remained volatile Friday following a sharp rise in the previous session. Thursday's rally was helped by a slide in the U.S. dollar as weakness in the greenback tends to aid dollar-denominated commodities and related shares. The U.S. dollar index is still on track for a weekly loss.

A "helpful combination of USD weakness, short covering, technical breakouts and brokers [were] suggesting a bottom for some base metals," said Mike Van Dulken, head of research at Accendo Markets, in a note.

Read: Why a January jobs slowdown may not be a bad sign (http://www.marketwatch.com/story/why-a-january-jobs-slowdown-may-not-be-a-bad-sign-2016-02-04)

After starting Friday in the red, platinum miner Anglo American PLC (AAL.LN) drove higher by 11%, which adds to Thursday's 20% leap. "[L]ook back over the last fortnight and the stock has tacked on almost 40%--a colossal gain for a blue chip, and one that for now anyway looks set to retain its FTSE 100 place," said Tony Cross, market analyst at Trustnet Direct.

Glencore PLC (GLEN.LN) (GLEN.LN) gained 2.5%, building on Thursday's 16% bounce. Standard & Poor's, citing sector challenges, cut the commodities trader and miner's debt rating on Thursday to BBB-, the lowest level of investment grade.

Oil swings: Shares in BG Group PLC (BG.LN) narrowed to a 0.2% rise. The energy company beat expectations for full-year production targets (http://www.marketwatch.com/story/bg-group-profit-slips-22-beats-production-target-2016-02-05-3485186). But underlying profit fell 22% in the fourth quarter, as oil prices collapsed. BG is being acquired by Royal Dutch Shell PLC (RDSB.LN) (RDSB.LN). Shell shares ended up 0.8%, off session highs.

Oil prices moved lower after the jobs report as the dollar gained ground. West Texas Intermediate oil fell 0.8% to $31.47 a barrel while Brent crude lost grip of gains and fell 0.6% to $34.25 a barrel.

Retailers: "Retailers are finding cheer off the back of reports showing January was a bumper month for U.K. high streets," or Main Street stores, said Trustnet's Cross.

Comparable-store sales in the five weeks to Jan. 31 rose 1.4% against the year-earlier period, said business advisory BDO in its monthly High Street Sales Tracker report.

"Although this reads as a fairly flat performance, the month was one of two halves with the first two weeks of the month showing consumers coming out in force for bargain hunting," BDO said in its report. Fashion retailers had a strong showing as sales rose 1.9%.

Retail shares were higher in the beginning of the day, but trimmed or erased gains after the U.S. jobs report. Department store operator Marks & Spencer Group PLC (MKS.LN) fell 0.1% and apparel seller Next PLC (NXT.LN) dropped 0.7%. Home improvement specialist Kingfisher PLC (KGF.LN) bulked up 1.2% and supermarket chain Tesco PLC (TSCO.LN) bounced up 2.8%.

Investing Insights: A global markets survival guide

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(END) Dow Jones Newswires

February 05, 2016 12:49 ET (17:49 GMT)

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