Europe surges on US data

Mon, 05 May 2008

European exchanges ended the week sharply higher on Friday following reports that the United States had lost fewer jobs that had been expected in April and might now avoid recession.

The London FTSE 100 index gained 2.11 percent to end the day at 6215.50, while in Paris the Cac 40 rose 1.46 percent to 5069.71. The Frankfurt Dax added 1.36 percent to close at 7043.23.

The Euro Stoxx 50 index of leading eurzone shares added 1.37 percent to finish at 3877.50 points.

On Wall Street the Dow Jones Industrial Average in mid-afternoon trade was up 0.19 percent at 13 034.67 while the Nasdaq composite was moving in the other direction, having lost 0.39 percent to reach 2471.09 on poor performances by certain tech stocks.

Powering the strong showing in Europe was a report from the US Labour Department that only 20 000 US jobs had been lost in April.

The unemployment rate, based on a separate survey, rate fell a tenth of a percentage point to 5.0 percent, the Labour Department said.

Despite the decline in nonfarm payrolls, the report was better than expected by private economists, who on average had forecast a loss of 75 000 jobs and a jobless rate of 5.2 percent.

"Job losses are way below the recession norm for this point of business cycle, if this is recession," said Robert Brusca at FAO Economics. "Many things do not really add up for the recession forecasters."

In Paris, economist Marc Toutati of Global Equities concurred.

"Uncle Sam is fighting back. The recession that has been announced so often in the past months has yet to emerge from the heads of certain economists to become reality."

In London banks drew support from another key US announcement on Friday, this time from the Federal Reserve, which unveiled plans to boost its liqudity support for banks suffering from a global credit squeeze.

HBOS gained 6.56 percent to finish at 495.50 pence while Royal Bank of Scotland added 5.56 percent to close at 365.25 pence.

Mining issues were also supported by improved prospects in the United States.

BHP Billiton rose 4.80 percent to 1876 pence while Rito Tinto gained 4.63 percent to reach 6106 pence.

One of day's principal losers was British Energy, which fell 3.89 percent to 728.50 pence on rumors that RWE of Germany had abandoned plans to put forward a takeover offer.

In Paris automakers Renault and Peugeot rose 6.2 percent to 70.17 euros and 3.22 percent to 46.43 euros respectively on improved April sales.

In reaction to lower oil prices Air France-KLM climbed 4.66 percent to 20.90 euros.

In Frankfurt auto manufacturer BMW, heavily dependent on exchange rate factors, jumped 3.89 percent to 36.62 euros as the dollar gained ground on the euro.

Energy group RWE added 1.37 percent to end the session at 74.95 euros on reports it had dropped plans to bid for British Energy.

Elsewhere there were gains of 1.82 percent to 7 665.80 on the Swiss Market Index, 1.92 percent to 14 060 on the Ibex-35 in Madrid, 0.53 percent to 3946.34 on the Bel-20 in Brussels, 1.69 percent to 34 527 on the SP/Mib in Milan and 1.19 percent to 481.21 on the AEX in Amsterdam.

Japanese share prices closed up 2.05 percent at the highest level in almost four months on Friday after the overnight gains on Wall Street and a weakening of the yen which boosted exporters, dealers said.

Tokyo's benchmark Nikkei-225 index closed at 14 049.26 points, the best finish since 11 January.

Hong Kong's key Hang Seng index closed up 1.89 percent at 26 241.02 points.