European stocks up ahead of key US jobs report

[July 02, 2010]  ROME (AP) -- European markets rose modestly Friday, with mining stocks boosted by Australia's decision to dump a "super profits" tax on the sector, but sentiment remained fragile ahead of a crucial U.S. jobs report.

The Australian government defused a damaging fight with big business by retreating from a planned 40 percent tax on miners' biggest profits, opting instead for a softer resource rent tax of 30 percent.

Resource-related shares advanced in Australia, with BHP Billiton Ltd. rising 0.3 percent and Rio Tinto Ltd. up 0.7 percent -- and boosted trading on London's FTSE 100. Anglo-American Antofagasta rose 1.2 percent and Kazakhmys was up 2.8 percent.

Ben Potter of IG Markets said it remained to be seen whether the early trading comeback will be sustained throughout the day, with the U.S. nonfarm payrolls data due out in the United States expected to have more bearing on market momentum.

"With the new trading month having started on such a downbeat note and poor economic indicators continuing to emerge, the outlook remains difficult at best and any signs of economic robustness out of Washington could at least help ensure we don't see too much more downside for equities," Potter said in a note.

The FTSE 100 index of leading British shares was up 0.52 percent at 4,830.76. Germany's DAX was down up 0.37 percent to 5,879.35, while France's CAC-40 was 0.48 percent higher at 3,356.03.

The euro, after surging a day earlier, lost some ground against the dollar, sliding 0.1 percent to $1.2505.

Ahead of the opening bell, Dow Jones industrial average futures fell 0.12 percent to 9,650. Standard & Poor's 500 index futures were up 0.18 percent to 1,023.

Investors are waiting for the U.S. jobs report due later Friday which is expected to show that employers cut about 110,000 positions in June. That figure reflects the loss of about 240,000 temporary census jobs.

Investors will be focused on hiring by businesses because that is a key factor needed to revive the economy. Economists polled by Thomson Reuters forecast that private employers added 112,000 jobs, which would be an improvement from the 41,000 added in May but not enough to prevent the unemployment rate from rising.

"Shout all you want about keeping your eye on the far more important private sector job count but the sour mood in markets of late means that few are likely to listen," DBS Bank said in a report. "Nonfarm payrolls are going to look ugly today."

A weaker-than-expected level of job creation would add to jitters about a slide back into recession -- an increasingly common fear among investors amid Europe's debt crisis and signs of slowing growth in China.

In Asia, Japan's Nikkei 225 stock average gained 01. percent to 9,203.71 after heavy selling this week. The index closed at a seven-month low on Thursday.

South Korea's Kospi fell 0.9 percent to 1,671.82 while Hong Kong's Hang Seng dropped 1.1 percent to 19,905.32. The Shanghai Composite Index gained 0.4 percent at 2,382.90.

Analysts are concerned recent disappointing manufacturing surveys from some Asia countries point to an economic slowdown in the second half.

"Asia's lead indicators have turned the wrong way," HSBC said in a report. "Still, this is not a double dip: it's only that restocking (of inventories) is fading and the fiscal stimulus is wearing off."

In currencies, the dollar rose to 87.88 yen from 87.72 yen late Thursday.

Benchmark crude for August delivery was up 23 cents at $73.18 a barrel in electronic trading on the New York Mercantile Exchange.

[Associated Press; By COLLEEN BARRY]

AP writer Alex Kennedy in Singapore contribu5ted to this report.

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