Visitors pass a sign inside the London Stock Exchange headquarters. The FTSE 100 index closed down 0.32% at 6,344.50 points yesterday.
European stock markets rose yesterday after strong US jobs data appeared to strengthen the case for an early Fed rate hike.
Investors had keenly awaited the jobs report after Federal Reserve Chair Janet Yellen said that if US economic activity remained solid the central bank could decide to increase interest rates before year end.
“The pace of jobs growth has slowed in recent months but Janet Yellen’s comments... suggest that she has seen the numbers and that they will not be an impediment to a December rate hike,” said Neil MacKinnon, economist at VTB Capital financial group.
Briefing.com analyst Patrick O’Hare said Labor Department data showing the US economy added 271,000 jobs in October, 90,000 more than forecast would “probably leave little question in the Fed’s mind that it should raise the target range for the federal funds rate at its December meeting.”
As Wall Street sought to digest the data the Dow Jones Industrial Average was up 0.17% in early trading after a slightly negative opening.
The tech-rich Nasdaq fell 0.10% to 5,122.69 points and the broad-based S&P 500 also slipped back 0.06% to 5,124.56.
London was also in the red, unlike its main continental counterparts.
London’s benchmark FTSE 100 index was down 0.32% at 6,344.50 points.
In the eurozone, Frankfurt’s DAX 30 index added 0.6% to 10,966.75 points and in Paris the CAC 40 shed 0.20% to 4,970.30.
Markets are waiting to see when the Fed and Bank of England will start to raise interest rates from record-low levels—moves that will hike costs for borrowers but lead to higher returns for savers and the increasing interest rate rumble now appears to be moving into overdrive.
On the currency markets, the euro slid to a six-month dollar low in London.
The eurozone single currency euro fell to $1.0707 shortly after the Labor Department reported 271,000 net new jobs for October. It had stood at $1.0881 late Thursday.
The pound dropped to $1.5141 from $1.5208, while 71.79 pence bought one euro, up from 71.55 pence Thursday.
“We’ve seen a substantial decline in this (euro-dollar) pair as markets price in the increasingly diverging monetary policies of the Fed and ECB,” said Craig Erlam, senior market analyst at Oanda trading group.
Rather than hiking eurozone rates, the European Central Bank is seen as preparing to launch fresh stimulus to prop up the single currency bloc’s economy.
In Britain meanwhile, the pound, which already fell Thursday after the Bank of England hinted that it was not in a rush to begin raising rates, dropped further Friday following poor data.
“September’s trade and industrial production figures provide further signs that the UK’s economic recovery remained unbalanced in the third quarter,” Capital Economics said in a research note.
On the corporate front, shares in miner BHP Billiton slumped 6.35% to 968.30 pence in London, topping the FTSE 100 losers’ board in the wake of a Brazilian mine mudslide that killed at least 17 people.
The mining company Samarco, which operates the site, is jointly owned by mining giants Vale of Brazil and BHP Billiton.
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