Stocks jump after relatively upbeat U.S. jobs data

The gains came after August's jobs report showed the U.S. losing fewer jobs than expected

Published September 3, 2010 1:35PM (EDT)

Stocks pushed higher Friday after a relatively upbeat U.S. jobs report for August eased concerns about the pace of the economic recovery in the world's largest economy.

In Europe, the FTSE 100 index of leading British shares was up 56.49 points, or 1.1 percent, at 5,427.53 while Germany's DAX rose 88.86 points, or 1.5 percent, at 6,172.71. The CAC-40 in France was 54.96 points, or 1.5 percent, higher at 3,686.39.

Wall Street was poised for a solid opening too -- Dow futures were up 101 points, or 1 percent, at 10,410 while the broader Standard & Poor's 500 futures rose 10.9 points, or 1 percent, at 1,100.50.

Sentiment in the markets was buoyed by the news that the U.S. economy shed fewer jobs than anticipated during August and that private payrolls actually increased more than expected.

Though the Labor Department reported that 54,000 nonfarm payrolls were lost during August, that was much less than the 110,000 consensus in the markets and was mainly due to the axing of one-off census jobs. When government jobs are stripped out, employers added 67,000, double market expectations.

And big positive revisions to previous months' data also helped shore up confidence that the U.S. economy is not in as bad a shape as many in the markets have been fearing. Much of the gloom in the markets during August was predicated on the fear that the U.S. economy would fall back into recession -- the so-called double-dip.

"The reaction has been considerable, indicative of a market that has become too pessimistic on risks of a double dip," said Alan Ruskin, an analyst at Deutsche Bank.

The market bulls seem to be in the ascendancy at the moment following three days of largely-positive economic data from around the world -- they certainly weren't in the ascendancy in August, when stocks fell sharply as doubts about the strength of the global recovery grew.

Despite the underlying improvement in sentiment, trading later though could well be complicated by the fact that the U.S. is about to enjoy a long weekend, with Labor Day -- the traditional end of the summer lull on Wall Street -- on Monday.

Yusuf Heusen, a senior sales trader at IG Index, said Wednesdays' stock market gains in the wake of a particularly upbeat manufacturing survey from the Institute for Supply Management remain intact but that "the long weekend that's coming up in the U.S. could see traders taking money off the table in the next few hours regardless of that employment reading from Washington."

In the currency markets, the jobs data supported the dollar, particularly against the yen. It was trading 1 percent higher at 85.16 yen, to the likely relief of Japanese policymakers and exporters, who have been increasingly worried by the sustained increase in the yen -- last week it hit a 15-year high against the dollar.

The dollar also gained some ground against the euro, which was unchanged at $1.2829 -- before the data, it had traded as high as $1.2859.

Earlier in Asia, Japan's benchmark Nikkei 225 stock index rose 51.29 points, or 0.6 percent, to 9,114.13 and South Korea's Kospi edged up 0.2 percent to 1,780.02. Hong Kong's Hang Seng index added 0.5 percent to 20,971.50.

China's benchmark Shanghai Composite Index closed flat at 2,655.39, though tech stocks surged on a government announcement of plans to support development of clean energy and other fields.

Australia's S&P/ASX 200 gained 0.2 percent to 4,541.20.

Benchmark oil for October delivery was down 66 cents at $74.36 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose $1.11 to settle at $75.02 a barrel on Thursday.


AP Business Writer Joe McDonald in Beijing contributed to this report.


By Pan Pylas


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