The European markets were up sharply again in early trade Friday. The markets were extending gains stemming from Thursday's European Central Bank announcement regarding the implementation of a bond purchase plan. The large infrastructure project announcement from China also spurred the markets higher this morning. However, in the afternoon investors were confronted by the disappointing results from the U.S. jobs report and those early gains began to erode. The markets still managed to finish the session in positive territory, with strength in shares of banks and mining stocks.
Employment in the U.S. rose by much less than expected in the month of August, according to a report released by the Labor Department on Friday, although the report also showed an unexpected drop by the unemployment rate.
The report showed that employment increased by 96,000 jobs in August following a downwardly revised increase of 141,000 jobs in July. Economists had expected an increase of about 125,000 jobs compared to the addition of 163,000 jobs originally reported for the previous month.
Despite the weaker than expected job growth, the unemployment rate dropped to 8.1 percent in August from 8.3 in July amid a notable decrease in the size of the workforce. The unemployment rate had been expected to come in unchanged.
China has added stimulus worth more than CNY 1 trillion ($158 billion) as the National Development and Reform Commission (NDRC) approved a slew of infrastructure projects this week to help the economy counter the global gloom, which has increasingly diluted export gains.
The International Monetary Fund is ready to work with the European Central Bank in the effective implementation of its new crisis-fighting measures, IMF Managing Director Christine Lagarde said on Thursday.
Welcoming the ECB decision, she said "the IMF stands ready to cooperate within our frameworks." "We see the ECB's action as an important step toward strengthening stability and growth in the Euro Area," she added.
The Euro Stoxx 50 index of eurozone bluechip stocks increased by 0.55 percent, while the Stoxx Europe 50 index, which includes some major U.K. companies, fell by 0.23 percent.
The DAX of Germany climbed by 0.66 percent and the CAC 40 of France gained 0.26 percent. The FTSE 100 of the U.K. rose by 0.30 percent and the SMI of Switzerland finished up by 0.14 percent.
In Frankfurt, Deutsche Bank rose by 5.40 percent. There were reports that the bank plans to eliminate more jobs than previously planned. Commerzbank also increased by 6.60 percent.
Deutsche Post declined by 3.60 percent. Germany's state-owned development and infrastructure bank KfW Bankengruppe, the largest shareholder of the German postal and logistics firm, said it would cut its holding in Deutsche Post by 5 percent.
In Paris, Air France-KLM gained 4.36 percent. The airline reported slight increases in passenger traffic and capacity for August, mainly benefiting from increased business in Europe and Asia-Pacific regions. However, all regions recorded sharp decline in cargo traffic.
Societe Generale increased by 6.91 percent Friday. BNP Paribas gained 2.32 percent and Credit Agricole climbed by 6.60 percent.
In London, Glencore International fell by 3.64 percent after the company raised its offer for miner Xstrata Plc. Shares of Xstrata climbed by 3.58 percent.
Mining stocks turned in a strong performance Friday. Vedanta Resources rose by 5.12 percent and Kazakhmys added 9.77 percent. Rio Tinto gained 6.15 percent and Antofagasta climbed by 5.96 percent. Anglo American finished higher by 7.17 percent and BHP Billiton increased by 3.42 percent.
Barclays climbed by 3.09 percent and Royal Bank of Scotland gained 4.71 percent. Lloyds Banking Group rose by 2.25 percent and HSBC added 1.51 percent.
German industrial production recovered unexpectedly in July suggesting that the largest euro-area economy is weathering the impact of the debt crisis.
Industrial production expanded 1.3 percent in July from a month ago, the Federal Ministry of Economy and Technology said Friday. The increase follows June's revised 0.4 percent fall and came in contrast to a flat reading forecast by economists.
German exports bounced back unexpectedly in July, despite the debt crisis significantly disrupting trading activities across Europe, in part due to poor demand. Imports also recorded a surprise recovery, reflecting the still-strong private consumption in the economy.
Exports increased 0.5 percent month-on-month in July on a calendar and seasonally adjusted basis, the Federal Statistical Office said Friday. This was in contrast to economists' prediction of a 0.5 percent decline and comes after a 1.4 percent drop in June.
Imports gained 0.9 percent following a 2.9 percent fall in the previous month. The outcome defied expectations of a 0.3 percent fall.
The foreign trade balance showed a surplus of EUR 16.9 billion in July, slightly less than EUR 18 billion in June. In July 2011, the surplus was EUR 10.4 billion. Economists had forecast a surplus of EUR 15.3 billion.
The French trade deficit narrowed more than expected in July due to a fall in imports from the prior month, data released by the Directorate General of Customs and Excise showed Friday. The deficit plunged to EUR 4.27 billion in July from EUR 6.06 billion in June. The deficit was forecast to fall to EUR 5.85 billion in July.
U.K. industrial production in July expanded at the fastest pace in 25 years as activity picked up from June's extra-holiday driven weakness. The July's rebound has raised hopes of better growth prospects in the third quarter. Industrial output grew 2.9 percent month-on-month, reversing June's 2.4 percent fall. The increase was the biggest since February 1987, and exceeded the 1.5 percent rise forecast by economists.
U.K. output price inflation accelerated more than expected to 2.2 percent annually in August from 1.8 percent in July, the Office for National Statistics said Friday. The annual rate was forecast to rise to 1.9 percent.
Output prices climbed 0.5 percent month-on-month, which was bigger than the 0.1 percent increase in July and 0.2 percent rise forecast by economists.
by RTT Staff Writer
For comments and feedback: email@example.com