Eurostocks fall back on jobs data

Technology stocks led by Finnish phone group Nokia pulled European share indexes off five-month highs yesterday as soft US employment data stoked fears about continued growth in the US economy.

Economy-sensitive stocks such as car makers also bore the brunt, with Germany's Volkswagen losing one per cent and premium carmaker BMW shed 1.5 per cent.

Corporate earnings jitters also weighed on the market ahead of next week's results from Nokia and Philips Electronics. Shares in Nokia fell 2.4 per cent and Philips lost 1.8 per cent.

By 1550 GMT the FTSEurofirst 300 pan European index unofficially closed 0.4 per cent down at 1,010.5 points, paring the week's gains to just 0.59 per cent. The index had put on 1.2 per cent last week.

Data showing US businesses had added only 96,000 jobs to payrolls last month, a number well below economists' forecasts for 148,000 new jobs hurt the market mood.

"It just opened the flood gate for sellers. People are now using that as an excuse to cut their exposure after the run-up we have seen in recent weeks," said a dealer at a French brokerage.

The DJ Euro Stoxx 50 index fell 0.64 per cent to 2,816.4 points.

"This is clearly disappointing as this means we've had a monthly progression of about 100,000 jobs over the past three months, compared to a monthly average of 200,000-250,000 earlier this year," said Valerie Plagnol, chief economist at CIC Securities.

Meanwhile, oil prices held near record highs at $52.70 a barrel even though oil unions in OPEC member Nigeria said a two-day wildcat strike would pass without any impact on exports.

Equity markets are expected to now focus on Europe's new results season which kicks off next week with analysts looking to see if high oil prices are crimping corporate profit growth and denting consumer confidence.

Updates are due next week from Nokia, Philips and majore retailers Carrefour and Hennes & Mauritz.

Some US firms, such as electronics chip leader Intel which also reports next week, have already warned ahead of their results.

Around Europe, London's FTSE 100 index rose 0.2 per cent, Paris's CAC-40 dropped 0.55 per cent and Frankfurt's DAX gave up 0.69 per cent.

Wall Street was lower by the time European markets closed as the jobs report and high oil prices overshadowed industrial conglomerate General Electric Company's higher earnings.

The Dow Jones industrial average lost 0.29 per cent to 10,095.9 points, while the technology-laced Nasdaq Composite Index fell 0.76 per cent to 1,933.6 points.

The jobs data was expected to sharpen a debate between US presidential election candidates President George W. Bush and Senator John Kerry later in the day over the economy's direction.

And worries about the economic outlook seemed to outweigh the possible benefits from a potentially more benign US interest-rate environment.

"The data were certainly not weak enough to prevent the Fed from going ahead with a new rate rise at its November meeting, but if this kind of disappointment occurred again then we can certainly expect the Fed to stop its tightening cycle prematurely," said SG economist Olivier Gasnier.

Elsewhere, European travel and leisure groups were hit by the strong crude oil prices and three attacks on tourist resorts in Egypt, but finished above the day's lows.

Shares in German airline Lufthansa fell 2.3 per cent to €9.59, however, with Lufthansa's finance chief quoted in the Financial Times Deutschland as saying that the airline's full-year profit goal would be hard to achieve because of high fuel costs.

But German utility E.ON bucked the weaker trend to put on 1.8 per cent at €62.4 after it repeated to newspaper Die Welt that it would raise dividends over the next few years.