European Stocks Climb as U.S. Private Jobs Growth Tops Forecast
European stocks climbed, extending the Stoxx Europe 600 Index’s biggest weekly gain in almost two months, after U.S. companies added more jobs than forecast in August, easing concern the economic recovery is faltering.
Credit Suisse Group AG and BNP Paribas SA led banks higher and Rio Tinto Group paced a rally in raw-material producers after the U.S. payrolls data. Aggreko Plc surged 5.5 percent as it said it has not received any takeover bids. Neopost SA, the French mailroom equipment maker, climbed 2 percent after reporting increased revenue.
The benchmark Stoxx 600 gained 0.9 percent to 260.4 at the 4:30 p.m. close in London, the highest level since Aug. 9. The gauge has rallied 3.7 percent this week, the most since July 9, as accelerating growth in U.S. and Chinese manufacturing and today’s jobs figures reassured investors. The measure is still 4.3 percent below this year’s high in April.
“Today’s jobs number was clearly better than expected and is welcomed by the market given the worries,” said Andy Lynch, who manages about $1.9 billion at Schroder Investment Management in London. “It may be a short-term bounce for the market as the debt in the U.S. economy still hasn’t gone away and the recovery is still in question.”
The Labor Department report showed U.S. private payrolls that exclude government agencies climbed 67,000, after a revised 107,000 increase in July that was more than initially estimated. The median estimate of economists surveyed by Bloomberg News called for a gain of 40,000. Even so, overall employment declined by 54,000 for a second month and the unemployment rate rose to 9.6 percent.
Stocks pared some gains after separate figures showed U.S. service industries expanded in August at the weakest pace in seven months. The Institute for Supply Management’s index of non-manufacturing businesses, which covers about 90 percent of the economy, fell to 51.5 from 54.3 in July. Readings above 50 signal growth and economists had projected a decline to 53.2.
“It seems that every fresh data point is eagerly awaited at the moment,” Jim Reid, a global strategist at Deutsche Bank AG, wrote in an e-mail. “Such a lower growth environment leaves all of us market participants on the edge as genuine soft patches will look more like potential double-dips than they did pre-2007.”
National benchmark indexes climbed in 15 of the 18 western European markets. France’s CAC 40 and the U.K.’s FTSE 100 gained 1.1 percent. Germany’s DAX rose 0.8 percent.
Credit Suisse, Switzerland’s second-biggest bank, rallied 3.2 percent to 47.09 francs and BNP Paribas, France’s largest, gained 1.9 percent to 53.44 euros. A measure of bank shares had the biggest gain among 19 industry groups in the Stoxx 600.
Raw-material shares were the second-best performing group. Rio Tinto, the world’s third-largest mining company, advanced 1.5 percent to 3,536 pence. BHP Billiton Ltd., the biggest, gained 1.8 percent to 1,936 pence.
Adecco SA, the supplier of temporary workers that gets 16 percent of sales from North America, climbed 3.2 percent to 51 Swiss francs.
Neopost gained 2 percent to 56.75 euros after saying second-quarter sales rose 6.9 percent from a year-earlier to 243.9 million euros ($313 million).
Aggreko climbed 5.5 percent to 1,515 pence. The world’s largest provider of mobile power-supply equipment has not received any takeover bids, external spokesman Tom Eckersley said by phone.
3G Capital’s $3.3 billion acquisition of Burger King Holdings Inc., the second-largest U.S. hamburger Chain, this week has brought the value of announced takeovers in 2010 to $1.36 trillion, according to data compiled by Bloomberg.
Theolia SA, the French wind-power company that raised cash this year to avert bankruptcy, plunged 11 percent to 1.43 euros after reporting a wider first-half net loss of 24.2 million euros. The company’s net cash position fell to 78.6 million euros from 94.2 million euros due to investments in wind farms in Italy, Germany and France.
Soco International Plc, a U.K. oil explorer in Africa and Southeast Asia, slid 8.4 percent to 436.6 pence after saying it will plug and abandon a well in the Democratic Republic of Congo.