European stock markets surge

Thursday July 02, 2009

LONDON: European stock exchanges surged ahead on Wednesday in line with a robust opening on Wall Street and in response to some positive US economic data despite worse-than-expected unemployment figures.

The London FTSE 100 index added 2.15 percent to close at 4,340.71 points while in Paris the CAC 40 rose 2.43 percent to reach 3,217. The Frankfurt Dax gained 2.0 percent to end the session at 4,905.44.

There were gains of 1.18 percent in Madrid, 2.12 percent in Brussels, 1.99 percent in Milan and 2.19 percent in Amsterdam.

Wall Street shares earlier in the day opened a new month and quarter on an upbeat note, with the Dow Jones Industrial Average up 1.36 percent at 8,561.57 at mid-day. The tech-heavy Nasdaq had risen 1.24 percent to 1,857.77.

Wall Street looked to overseas markets for early cues, shrugging off an early report showing a weaker-than-expected US labor market.

"Some upbeat manufacturing data from China and Europe are helping soothe concerns that the economic reality has fallen behind the recent rally in the equity markets since mid-March," said analysts at Charles Schwab & Co.

That helped offset a survey from payrolls firm showing the US private sector shed 473,000 jobs in June.

"The ADP report for June wasn't as dire as the initial headlines indicated," said Patrick O'Hare at Briefing.com

"Nonetheless, it isn't good news. It is a sobering reminder that the labour market is weak and that there is a heightened risk of disappointment in the (official) nonfarm payrolls number that will be reported Thursday."

But gains accelerated on a report showing the US manufacturing sector showed signs of emerging from its slump in June, after similar reports from Europe and China.

The US Institute of Supply Management said its index of the sector also known as the purchasing managers (PMI) index, increased to 44.8 percent from 42.8 percent in May.

It was below the 50 percent level that separates expansion and contraction, and just under the 45 percent expected by private economists.

But Ryan Sweet at Moody's Economy.com said the ISM report "suggests that the worst of the manufacturing contraction is behind us. The details of the report were much more upbeat than the headline number would suggest."

In Asia on Wednesday, Japanese share prices ended slightly lower as investors took profits after a key index of business confidence rose by less than expected, dealers said.

Tokyo's benchmark Nikkei-225 index lost 18.51 points, or 0.19 percent, to end at 9,939.93, a day after ending at a two-week high.

The Nikkei topped 10,000 points at one point during the day but failed to hold above the key level.

"As the index topped 10,000, it was a good time to sell," said Hideaki Higashi, a strategist at SMBC Friend Securities.

The Bank of Japan said in its quarterly Tankan survey that business confidence among major Japanese manufacturers had improved for the first time in two-and-a-half years.


(AFP)