World markets up on mining stocks before jobs data

[June 05, 2009]  LONDON (AP) -- World stock markets rose Friday ahead of key U.S. jobs data, with mining companies in strong demand after Rio Tinto PLC scrapped its $19.5 billion deal with China's Chinalco and opted instead to raise $15.2 billion in a share sale and set up a joint venture with rival BHP Billiton.

In Europe, Germany's DAX was up 8.19 points, or 0.2 percent, at 5,072.99 while France's CAC-40 index rose 35.68 points, or 1.1 percent, to 3,347.71.

Britain's FTSE 100 index was the big gainer in Europe, rising 54.63 points, or 1.3 percent, to 4,441.57 with dual-listed Rio Tinto up over 11 percent and BHP Billiton nearly 10 percent. Other mining groups like Antofagasta PLC and Vedanta Resources were also in demand.

Investors in Britain reacted positively, surmising the sale would help Rio pay down its debts as the partnership saves the two companies billions and gives them greater leverage over pricing.

The gains in Britain came despite mounting uncertainty surrounding the future of Prime Minister Gordon Brown another resignation from his Cabinet. James Purnell, the then Works and Pensions Minister, called on Brown to quit to save the party from a mauling at the next general election.

So far, Brown has held firm and is currently attempting a restructuring of his government. Alistair Darling, the finance minister, has kept his job despite speculation earlier in the week that Brown wanted him out.

The big event of the day will be the U.S. non-farm payrolls data for May. Weekly jobless claims data Thursday stoked hopes that the jobs figures due later Friday will not be as bad as many in the markets had been predicting and that helped U.S. stocks close higher.

"Much more positive claims than expected buoyed equity trading in the U.S. yesterday and many believe that it will augur well for non-farm payrolls today," said David Buik, markets analyst at BGC Partners.

As a result, Wall Street is poised to open higher, with Dow futures up 22 points, or 0.3 percent, at 8,752 and the broader Standard & Poor's 500 futures 2.6 points, or 0.3 percent, firmer at 943.10.

Stock markets started to rally in March on better than expected economic data, particularly out of the U.S. As stocks usually start rallying 6 to 9 months before actual recovery emerges in the economy, investors have bet that the massive sell-off in markets during the financial crisis was overdone. If the data starts to disappoint expectations, then investors may have to reconsider their optimism.

"The release of the non-farm payrolls will also help determine precisely just how bullish traders are feeling as we move into the weekend break," said Matt Buckland, a dealer at CMC Markets.

The markets are expecting 520,000 jobs to have been lost in May, which would mark the second straight month that job losses slowed. The unemployment rate is seen rising from 8.9 percent in April to 9.2 percent in May -- possibly the highest since September 1983, when the U.S. was recovering from a severe recession.

Earlier in Asia, Japan's Nikkei 225 stock average rose 99.05 points, or 1 percent, to an eight-month high of 9,768.01 while Hong Kong's benchmark Hang Seng closed up 1 percent to 18,679.53 in seesaw trade.

South Korea's Kospi took back its losses to add 1.2 percent to 1,394.71 but Shanghai's benchmark edged down 0.5 percent. In Australia, the main index advanced 0.9 percent.

Oil prices climbed toward $70 a barrel, with benchmark crude for July delivery up 6 cents at $68.87 a barrel. On Thursday the contract shot up $2.69.

In currencies, the dollar gained to 96.79 yen from 96.63 yen, and the euro was steady around $1.4190.

[Associated Press; By PAN PYLAS]

AP Business Writer Jeremiah Marquez in Hong Kong contributed to this report.

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