LONDON: European stock markets rebounded yesterday following heavy losses the previous day, as investors closed out the trading week encouraged by a surge in US jobs underlining a strong recovery.
The US economy pumped out 321,000 new jobs in November, the highest monthly number in nearly three years, the Labor Department said.
London’s benchmark FTSE 100 index climbed 0.86 percent to stand at 6,736.87 points in afternoon trading in the British capital.
Frankfurt’s DAX 30 surged 1.69 percent to 10,018.29 points and the CAC 40 in Paris rallied 1.84 percent to 4,403.58 compared with Thursday’s close.
Europe’s equity markets had slumped on Thursday after the European Central Bank disappointed markets eager for central bank stimulus to revive the stalling eurozone economy, traders said.
Investors yesterday “responded to reports that emerged after the close on Thursday that claimed the ECB is preparing a broad based quantitative easing (stimulus) package for January”, said Craig Erlam, market analyst at Alpari traders.
That was followed by the unexpectedly strong US employment report for November showing that the US recovery “evidently remains strong... These figures bode well for our forecast of continued strong expansion,” said Robert Wood, Berenberg’s chief UK economist.
Wall Street stocks opened moderately higher yesterday. Five minutes into trade, the Dow Jones Industrial Average was up 0.26 percent at 17,946.27 points.
The broad-based S&P 500 advanced 0.21 percent to 2,076.32, while the tech-rich Nasdaq Composite Index added 0.33 percent at 4,784.94.
The oil market fell yesterday after major producer Saudi Arabia slashed the price of the crude it sells to Asia and the United States, analysts said. Brent North Sea crude for delivery in January fell 50 cents to stand at $69.14 per barrel in early afternoon London deals.
US benchmark West Texas Intermediate for December slipped 56 cents to $66.25 compared with Thursday’s closing value.
Sliding oil prices have contributed to the drop in inflation to worrying low levels in the eurozone, with some countries even seeing outright falling prices.
Deflation may sound good for the consumer, but falling prices can trigger a vicious spiral where businesses and households delay purchases, throttling demand and causing companies to lay off workers.
The ECB on Thursday held its main “refinancing” rate steady at 0.05 percent, as expected at its monthly policy meeting, and its chief Mario Draghi said the bank has stepped up preparations for more anti-deflation measures, but that these will be reassessed only in January.
Euro falls
The euro fell in yesterday’s trading to $1.2303 compared with $1.2380 late in New York on Thursday. The European single currency had fallen to a two-year low of $1.2280 ahead of the ECB’s announcements.
The dollar reached a new seven-year high at 121.39 yen yesterday. Tokyo stocks closed at a seven-year high — extending their winning streak for a sixth straight day — as a falling yen and oil prices continue to boost investor spirit.
The positive sentiment could continue as participants await to hear if the Japanese government will on Monday revise upward the July-September GDP figure, with many economists expecting it to be better than preliminary data suggested.AFP
