US economic data take center stage in markets

[June 01, 2011]  LONDON (AP) -- Global stocks were steady Wednesday ahead of a raft of U.S. economic figures which will culminate in the key monthly jobs data at the end of the week, while the euro held on to recent gains on hopes Greece will get more help with its debts.

At the start of each month, investors have a slew of U.S. economic indicators to digest, in particular the monthly nonfarm payrolls data, which often set the tone in markets for a week or two after their release.

Before Friday's payrolls data, traders will on Wednesday focus on the May manufacturing survey from the Institute for Supply Management. The main index is expected to drop to around 57 from the previous month's 60.4, providing further evidence that the U.S. recovery is slowing down.

Concerns over the U.S. economic recovery and Europe's debt crisis, particularly whether Greece will get more emergency loans, have dominated market attention over recent weeks.

The May survey from the private payrolls firm ADP could also shed some light on whether Friday's government data, which also includes the public sector, will come in line with expectations.

Adrian Foster, an analyst at Rabobank International, is expecting the ADP report to show 175,000 jobs added in May, little changed on the previous month's 179,000.

"Such a result will likely calm nerves as we look to Friday's payrolls report," Foster said.

At the moment, the consensus in the markets is that Friday's government data will show that around 200,000 jobs were added during May, slightly down on April's 244,000 increase.

Ahead of the U.S. figures later, Wall Street futures and stocks in Europe were trading in narrow ranges.

In Europe, the FTSE 100 index of leading British shares was down 0.1 percent at 5,987 while Germany's DAX fell an equivalent rate to 7,287. The CAC-40 in France was flat at 4,007.

A similarly steady opening is expected when the U.S. opens for business -- Dow futures were down 0.1 percent at 12,552 while the broader Standard & Poor's 500 futures were unchanged at 1,344.

The ADP data, which are released before the bell, could change expectations for the open though. The ISM survey is released half an hour into the trading session.

"The ADP numbers ahead of the open will attract some interest with some using it as a proxy to second guess Friday's nonfarm payrolls, but with that event looming over markets, and considering the strong gains made on Tuesday, we may be in for a couple of quiet, range days," said Yusuf Heusen, a senior sales trader at IG Index.

Currency markets were also subdued, with the euro down 0.1 percent at $1.4413 and the dollar down an equivalent rate to 81.25 yen.

The euro, which suffered in April on fears over Greece's debt, has recovered strongly over the past days on mounting expectations that Greece will get more help from its partners in the eurozone and the International Monetary Fund to meet financing commitments through to 2013. Alongside a second rescue package following last year's euro110 billion package of loans, Greece is expected to have to increase its privatization program and make more austerity cuts.

Few analysts, however, think that a second rescue package would necessarily prevent a Greek debt restructuring down the line given weak economic growth forecasts and political infighting.

"We remain sceptical that the modest rebound in risk sentiment over the past week will prove sustainable beyond the near-term especially any renewed optimism regarding Greece where a rehash of previously unsuccessful support steps will likely fail again," said Lee Hardman, a currency strategist at the Bank of Tokyo-Mitsubishi UFJ.

Earlier in Asia, Japan's Nikkei 225 rose 0.3 percent to close at 9,719.61 after Bank of Japan Governor Masaaki Shirakawa said in a speech that supply and electricity disruptions caused by the March 11 earthquake and tsunami were easing. The economy could stage a moderate recovery starting in the second half of fiscal 2011, he said.

Elsewhere, South Korea's Kospi index slipped less than 0.1 percent to 2,141.34 after the government announced the country's inflation rate eased for a second straight month in May, to 4.1 percent.

Hong Kong's Hang Seng index drifted 0.2 percent lower to 23,626.43 while mainland China's Shanghai Composite Index dropped 0.3 percent after data showed China's manufacturing sector easing in April. The state-affiliated China Federation of Logistics and Purchasing reported that its purchasing managers index, or PMI, fell to 52.9 in April, down fom 53.4 in March.

Australia's S&P/ASX 200 failed to hold on to gains and closed flat at 4,707.30.

In the oil markets, the price of crude continued to hover around the $100 a barrel mark. Benchmark oil for July delivery was down 10 cents to $102.58 a barrel in electronic trading on the New York Mercantile Exchange after a $2 plus gain on Tuesday.

[Associated Press; By PAN PYLAS]

Pamela Sampson in Bangkok contributed to this report.

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