European stocks rebound on US data

Friday July 10, 2009

LONDON: European stock markets halted a three-day losing streak Thursday and finished in positive territory on better-than-expected US employment data. Sentiment was also boosted by news that US aluminium giant Alcoa had limited its second quarter loss to 454 million dollars, a better showing than the market had expected. In London the FTSE 100 index gained 0.45 percent to close at 4,158.66 points while in Paris the CAC 40 rose 0.54 percent to reach 3,025.94. The Frankfurt Dax added 1.26 percent to close at 4,630.07. Elsewhere in Europe there were gains of 1.18 percent in Milan, 0.88 percent in Madrid, 1.01 percent in Amsterdam and 0.30 percent on the Swiss Market Index. Wall Street wavered in early trade as investors fretted that the corporate earnings season would trample on signs of recovery from the severe recession. The Dow Jones Industrial Average had risen 0.13 percent to 8,188.84 at 1545 GMT. The tech-heavy Nasdaq composite gained 0.62 percent to 1,757.94. New York stocks pared back opening gains that had been bolstered by the Alcoa results, which unofficially kicked off the new round of quarterly corporate earnings. "With Wall Street nearly shaking in its boots ahead of a new round of corporate earnings, Alcoa Inc.'s better-than-expected quarterly report came as a breath of fresh air," said Joseph Hargett of Schaeffer's Investment Research. Alcoa, which jumped more than 4.0 percent in opening trade, was down 0.74 percent at 9.39 dollars. "There has been a sharp increase in investor pessimism in recent days," said Scott Marcouiller of Wells Fargo Advisors. On the macroeconomic front, new claims for US unemployment benefits fell 8.4 percent in the past week to a six-month low. But the number was skewed by fewer-than-expected layoffs in the automotive sector, the Labor Department said. The Labor Department said that initial claims fell to a seasonally adjusted 565,000 in the week ended July 4, shortened by the Independence Day holiday. Andrew Gledhill of Moody's Economy.com said the Labor Department's seasonal adjustment "anticipated a jump in layoffs due to summer auto plant shutdowns. Since these layoffs had already occurred, the jump never materialized, sending claims plummeting." In Europe, the US employment data was enough to spark a modest rebound, although gains began to fade in line with a loss of momentum on Wall Street. Trading volumes were weak in the absence of further data. "I don't think investors have much of an appetite when there are few indicators," said Alice Lhabouz of Turgot Asset Management. State-owned electricity group EDF nonetheless shot up 1.32 percent to reach 31.36 euros after its chief executive, Pierre Gadonneix, said the company was looking for a 20 percent hike in tariffs over three years. With a pick-up in crude prices in New York, oil giant Total rose 1.07 percent to finish at 36.60 euros. In Frankfurt steel makers, under heavy pressure on Wednesday, bounced back. ThyssenKrupp added 1.38 percent to reach 16.85 euros while Salzgitter gained 2.37 percent to finish at 58.65 euros. Mining issues were among the day's big winners in London, where Anglo American rose 5.59 percent to 1,651 pence and Rio Tinto 3.77 percent to 1,967 pence. Markets were mixed in Asia Thursday with a stronger yen sending Tokyo's market down for a seventh straight session, while jitters left many dealers sidelined before the corporate earnings season. Japan's Nikkei lost 1.38 percent, while Sydney was 0.12 percent off. However, Hong Kong bounced back from early selling pressure to rise 0.39 percent and cap a three-day losing streak, with dealers following further gains in China's markets. Shanghai added 1.37 percent on strong car sales, while Singapore added 2.11 percent. (AFP)