Volkswacht Bodensee - Pound climbs after Labour's UK election win

London's benchmark FTSE 100 index gave up early gains made following news that Keir Starmer would become Britain's new prime minister after Labour trounced Rishi Sunak's Conservatives as Wall Street opened.

Labour's widely forecast triumph has sparked investor hope of economic stability amid easing inflation, although Starmer faces tough challenges in the form of strained public finances, a stretched state health service and flagging economic growth.

"The main beneficiaries of the UK election result were UK housebuilders which gained around 3 percent on the day while banks and energy companies slid," said Axel Rudolph, senior market analyst at online trading platform IG.

Paris stocks finished lower ahead of France's crucial legislative vote this weekend despite tactical voting efforts appearing to have reduced the chances of the far right from taking over the government.

Analysts remain wary that the second-biggest economy in the European Union could be headed for a period of political deadlock if there is no overall winner on Sunday.

"After some of the left and centrist candidates pulled out from the elections, the most likely scenario is a hung parliament," noted research consultancy Oxford Economics.

"France will likely enter a period of uncertainty. This would result in policy paralysis, delaying fiscal consolidation and preventing any meaningful reforms until the next presidential election."

- US jobs data -

Investor sentiment had been given a boost Thursday as softer US labour market data gave the Federal Reserve room to cut interest rates.

US job gains eased slightly in June while unemployment edged up, government data showed, in the latest sign that the world's biggest economy is cooling as policymakers hope.

The country added 206,000 jobs last month, said the Labor Department, marking a slower pace of hiring than May's revised 218,000 figure.

But the gains still beat a Briefing.com consensus estimate of 185,000, signalling that the labour market remains relatively resilient.

Wall Street was mixed in morning trading, with activity fairly low as many investors make a long weekend after markets were closed Thursday for the July 4 Independence Day holiday in the United States.

Briefing.com analyst Patrick O'Hare said: "The key takeaway from the report is that labour market conditions are softening, which will provide the Fed some cover to cut rates in September if it so chooses."

He noted market expectations of a rate cut in September rose slightly, while bond yields cooled.

Asian stock markets closed mostly lower Friday, a day after Tokyo's indexes hit record highs.

The yen recovered further against the dollar after this week striking the lowest level in nearly four decades.

- Key figures around 1530 GMT -

New York - Dow: DOWN less than 0.1 percent at 39,278.93 points

New York - S&P 500: UP 0.2 percent at 5,549.64

New York - Nasdaq Composite: UP 0.7 percent at 18,307.43

London - FTSE 100: DOWN 0.5 percent at 8,203.93 (close)

Paris - CAC 40: DOWN 0.3 percent at 7,675.62 (close)

Frankfurt - DAX: UP 0.1 percent at 18,475.45 (close)

EURO STOXX 50: DOWN 0.2 percent at 4,979.39 (close)

Tokyo - Nikkei 225: FLAT at 40,912.37 (close)

Hong Kong - Hang Seng Index: DOWN 1.0 percent at 17,799.61 (close)

Shanghai - Composite: DOWN 0.3 percent at 2,949.93 (close)

Pound/dollar: UP at $1.2808 from $1.2765 on Thursday

Euro/pound: DOWN at 84.56 pence from 84.69 pence

Euro/dollar: UP at $1.0831 from $1.0813

Dollar/yen: DOWN at 160.67 yen from 161.16 yen

West Texas Intermediate: UP 0.5 percent at $84.30 per barrel

Brent North Sea Crude: UP 0.3 percent at $87.72 per barrel

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D.Bachmann--VB