Much better-than-expected US jobs data pushed European stock markets sharply higher yesterday, with the figures taken as another sign the world’s biggest economy has turned the corner.
The US economy generated 243,000 new jobs in January, way above the 155,000 forecast, with the unemployment rate falling to 8.3 per cent, a near three-year low, from 8.5 per cent.
“Job growth was widespread in the private sector, with large employment gains in professional and business services, leisure and hospitality, and manufacturing,” the Labour Department said.
Dealers said the report, combined with other solid data, reinforced hopes that the US economy is now on much safer ground although the eurozone debt crisis remains a worry in the absence of any deal to save Greece from default.
Talks continue to drag on between Athens and its creditors over an unprecedented sovereign debt write-down but an accord remains elusive as a March 20 deadline for Greece to repay maturing debt looms closer.
In London, the FTSE 100 index of leading shares closed up 1.81 per cent at 5,901.07 points. In Paris, the CAC-40 index jumped 1.52 per cent to 3,427.92 points and in Frankfurt the DAX 30 advanced 1.67 per cent to 6,766.67 percent.
In New York, the blue-chip Dow Jones Industrial Average was up 1.15 per cent at around 1640 GMT while the tech-heavy Nasdaq Composite put on 1.44 per cent.
The European single currency slipped as the US jobs report buoyed the dollar. The euro was at $1.3108, down from $1.3142 in New York late Thursday.
Dealers said the US data was a very pleasant surprise, giving stocks a real boost, especially after a muted US private sector jobs report on Wednesday had left markets cautious about yesterday’s report.
“It is a very nice surprise. The ADP report ... showed a slowdown in hiring and it was feared this would make for disappointing figures Friday. Instead, it was completely the opposite,” said Alexandre Baradez at Saxo Banque in Paris.
“The improvement seen since last summer is confirmed clearly,” he added.
Rob Carnell, chief economist at ING, said the pace of the labour market pick-up was now such that the US central bank might even have to raise interest rates sooner than expected.
On Thursday, US Federal Reserve chief Ben Bernanke had warned that the labour market still had a long road to recovery and that he remained concerned about persistently high unemployment.
“We still have a long way to go before the labour market can be said to be operating normally,” Mr Bernanke said, warning that the economy had picked up but still remained vulnerable to shocks and the eurozone turmoil.
In Asian trade earlier yesterday, Tokyo slid 0.51 per cent, Sydney fell 0.39 percent while Hong Kong was flat and Shanghai added 0.77 per cent.