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The broker raised its price target for the company from ￡20 to ￡25 and lifted its long-term earnings forecasts to around 10pc above consensus. Liberum Capital said the change in forecast was partly down to raised profit expectations for Johnson Matthey's precious metals activities.

Other winners included Imperial Tobacco, which rose 19p to ￡18.93 on a smaller-than-expected jump in Spanish tobacco taxes. Madrid said the tax rise would raise €780m (￡639m) a year – less than many had anticipated – under a package of reforms it hopes will calm investor concerns about its economy.

Away from the leaderboard, speculation continued to grow about the future of Kesa Electricals, owner of high street retailer Comet, following the release of a note from UBS.

Earlier this week, activist investor Knight Vinke raised its stake in the Kesa to 7pc, fuelling suggestions that a break-up of the chain could be imminent. Shares in the company rose 0.4 at 174p as UBS analysts Adam Cochrane and Andrew Hughes speculated that Knight Vinke "may try to instigate a one-off return of capital". This may come through a sale and leaseback of €300m of the company's French property, disposing of either Comet or one of its emerging businesses or increasing financial gearing at the company, they said.

However, the analysts had doubts over whether Knight Vinke's position was likely to be enduring. "The investment has attracted investor speculation and interest but we are unsure as to what long-term shareholder value can be created ahead of what the current management is already undertaking."

Among the laggards, shares in Man Group shed 9.6 to 279.1p as Numis Securities cuts its rating for the hedge fund manager to "reduce" from "hold" in an otherwise neutral review of UK asset managers.

Luxury retailer Burberry also fell out of fashion yesterday. The company found itself among the losers after a short rally – which saw the shares jump by over 10pc in two days – came to an end.

Shares in the company retreated 20p to ￡10.79 despite Seymour Pierce initiating coverage on the company with a "buy" rating. Kate Calvert, retail analyst at the broker, said the brand has been "reinforced as a modern, trend setting, 'must have' luxury brand".

"The business model continues to change as management tackles many of the distribution issues and moves to a retail-led business model. The full benefits of many of these actions are yet to come through profit wise."

The financial services sector was also subdued as insurers weighed on the market. Old Mutual fell 3.1 to 120.1p, Aviva slipped 5.8 to 379.5p while Standard Life closed down 2.2 at 206p.

Bucking the trend was St James's Place, the mid-cap wealth manager. It jumped 14.9 to 268p in a delayed response to a rebound in the wider insurance sector earlier this week.

Barrie Cornes, insurance analyst at Panmure said: "The last few days have seen the insurers bounce as fears over Irish debt eased after confirmation that exposures are relatively small and manageable. At St James's Place the shares missed the rally earlier in the week but bounced having been relatively left behind." Director share dealing, lack of Irish debt exposure and a general recovery in the mid-cap market also helped.

The FTSE 250 closed up 5.37 at 11082.17, helped by a late dash by online grocer Ocado to the top secondliner's leaderboard. The company, which has been criticised since its controversial 180p-a-share flotation in July, saw its shares close up 16.6 – or 11pc – to 170p on suggestions that US investors were buying into the business.

3pm: US unemployment rises

The benchmark FTSE 100 index fell during afternoon trading after an unexpected rise in US unemployment.

The blue-chip index fell by 0.2pc to to 5,756.77 as data revealed that 39,000 jobs were created in the world's largest economy last month - significantly less than economists had predicted.

The news led a retreat in US shares with the Dow Jones sliding 30.99 points to 1,217.8 during early trading.

12pm: Markets await US data

Mining shares topped the leaderboard at midday as attention shifted away from Eurozone debt.

Fresnillo rose 3.45pc to ￡15.58, while Kazakhmys was up 1.48pc to ￡15.09 and Antofagasta advanced 1.42pc to ￡14.33 as metal prices rose across the sector, which was also buoyed by Walter Energy's $3bn (￡1.91bn) takeover of Western Coal.

Gerard Lane, equity analyst at Shore Capital was bullish on the sector's prospects in the lead up to Christmas:

“Given the rise in metal prices of late we suggest that the mining sector’s earnings are likely to continue to be revised higher and given its low valuation we remain positive on the sector.”

Elsewhere, shares in Man Group shed 2.8pc as Numis Securities cuts its rating for the hedge fund manager to "reduce" from "hold" in an otherwise fairly neutral review of British asset managers.

Numis said it has "marked to market its forecasts for all companies under coverage to a consistent date as of 30/11/10 to reflect movements in performance, markets and foreign exchange since we last published on each of the individual companies."

For Man Group, the broker pointed out that its main AHL fund had returned a fall of 5.1pc since its chief executive said it was performing well in a QE2 (quantitative easing) market, meaning it has a negative mark to market as a consequence.

Burberry was also among the largest fallers despite Seymour Pierce initiating coverage on the company with a "Buy" rating.

In her recommendation, Kate Calvert, retail analyst, said: “The brand has been reinforced as a modern, trend setting, ‘must have’ luxury brand. The business model continues to change as management tackles many of the legacy distribution channel issues (historic license and wholesale agreements) and moves to a retail-led business model. The full benefits of many of these actions are yet to come through profit wise.”

Despite this, shares in the company were down 1.82pc to ￡10.79 by midday as the company reversed recent gains – which had seen shares in the company jump more than 10pc in just two days.

9am: Footsie flat in early trading

After the biggest two-day rally for the FTSE 100 since May, investors held their breath as they awaited US employment figures.

Financial shares took the biggest knock. Old Mutual fell 2pc to 121p and Man Group shed 2.5pc to 281p.

In Paris the CAC 40 slipped 0.8 percent to 3,744.24 points while the Frankfurt DAX dropped 0.14 percent to 6,947.31.

Japan's Nikkei 225 stock average hit a fresh six-month high intraday high at one point, before edging up just under 0.1pc to 10,172.89.

Hong Kong's Hang Seng index gained 0.1pc to 23,479.92.

Oil prices hovered near $88 a barrel, with losses tempered by hopes that demand for crude will improve. In currencies, the dollar was down against the yen but up against the euro.

The Dow Jones Industrial Average had its biggest two-day rally since July, closing up nearly 1pc to 11,362.41as US home sales and retail purchases topped estimates.

Friday's Market report:

US roadshow delivers new Ocado investors

Thursday's market report:

FTSE today: market report - as it happened Dec 2, 2010

GKN in fast lane as FTSE driven up 2.2pc

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