European stocks shrug off disappointing US jobs data

AFP/LondonEurope’s main stock markets mostly shrugged off disappointing monthly US jobs data yesterday that suggested the recovery in the world’s top economy isn’t as strong as many hoped. London’s FTSE 100 index of leading shares dropped 0.51% to end at 6,647.87 points. But Frankfurt’s Dax 30 was essentially stable, slipping 0.05% to 8,406.94 points, while the Cac 40 in Paris squeezed out a gain of 0.07% to 4,045.65 points. Milan shed 0.24% but Madrid gained 0.4%. The euro rose to $1.3278 from $1.3208 late in New York on Thursday. The dollar slid to ¥98.88 from ¥99.52. On the London Bullion Market, the price of gold dropped to $1,309.25 an ounce from $1,315 on Thursday. Official data released yesterday showed the US unemployment rate fell to a better-than-expected 7.4% in July from 7.6% in June, but jobs growth disappointed. The Labour Department reported the US added 162,000 jobs last month, well below the 175,000 expected on average by analysts. On Thursday, the Institute for Supply Management’s PMI index showed that US manufacturing activity surged to the highest level for more than two years in July, well above market estimates. “The downside of the disappointing employment report is that it shows growth isn’t as strong as participants wanted to believe yesterday,” said Patrick O’Hare of Briefing.com. At 7.4%, the jobless rate is the lowest since December 2008, when it was 7.3%. That is markedly better than in July 2012, when the jobless rate stood at 8.2%. Some analysts said the improvement in the unemployment rate increased the chances the Federal Reserve will begin to reduce its bond-buying programme in September. However other analysts said the disappointing job creation numbers mean the Fed would likely hold off, a move that would please some investors. The data introduce “further uncertainty into the timing and amount of any Fed tapering programme, with expectations of a September taper starting to diminish,” said Michael Hewson at CMC Markets UK. US stocks slid on the jobs data. In midday trade, the Dow Jones Industrial Average was down 0.21% at 15,595.66 points. The broad-market S&P 500 shed 0.14% at 1,704.43 points, pulling back from Thursday’s record closing high. And the tech-rich Nasdaq Composite slipped 0.05% to 3,673.83 points.Meanwhile in London, shares in Royal Bank of Scotland slid 3.3% to 322.5 pence despite the state-rescued lender returning to profit in the first half. On the upside, shares in IAG jumped 6.7% to 317 pence after the parent of British Airways and Spanish carrier Iberia said it had swung into profit in the second quarter.