Stocks jump after relatively upbeat US jobs data

[September 04, 2010]  LONDON (AP) -- Stocks pushed higher Friday after a relatively upbeat U.S. jobs report for August eased concerns about the pace of the economic recovery in the world's largest economy.

In Europe, the FTSE 100 index of leading British shares closed up 1.1 percent, at 5,428.15 while Germany's DAX rose 0.8 percent to 6,134.62. The CAC-40 in France was 1.1 percent, higher at 3,672.2.

On Wall Street, the Dow Jones industrial average was up 0.7 percent at 10,388.90 in midday trading New York time, while the broader Standard & Poor's 500 index rose 0.8 percent, to 1,098.68.

Sentiment in the markets was buoyed by the news that the U.S. economy shed fewer jobs than anticipated during August and that private payrolls increased more than expected.

Though the Labor Department reported that 54,000 nonfarm payrolls were lost during August, that was much less than the 110,000 consensus in the markets and was mainly due to the axing of one-off census jobs. When government jobs are stripped out, employers added 67,000, double market expectations.

And big positive revisions to previous months' data also helped shore up confidence that the U.S. economy is not in as bad a shape as many in the markets have been fearing. Much of the gloom in the markets during August was predicated on the fear that the U.S. economy would fall back into recession -- the so-called double-dip.

"The reaction has been considerable, indicative of a market that has become too pessimistic on risks of a double dip," said Alan Ruskin, an analyst at Deutsche Bank.

The market bulls seem to be in the ascendancy at the moment following three days of largely positive economic data from around the world -- they certainly weren't in the ascendancy in August, when stocks fell sharply as doubts about the strength of the global recovery grew.

"This week's U.S. economic data has not upset the bulls so there is scope for further near-term gains in equities," said Neil MacKinnon, global macro strategist at VTB Capital.

Despite the underlying improvement in sentiment, trading later though could well be complicated by the fact that the U.S. is about to enjoy a long weekend, with Labor Day -- the traditional end of the summer lull on Wall Street -- on Monday.

Worries about Hurricane Earl, which is heading up the Eastern Seaboard, could also prompt traders to head off earlier than they planned.

"Expect liquidity to drop off quickly at the end of the (U.S.) morning session, as New York heads home early for the holiday weekend and to prepare for the hurricane making its way up the coast," said Michael Woolfolk, an analyst at Bank of New York Mellon.

In the currency markets, the jobs data supported the dollar, particularly against the yen. It was trading 0.2 percent higher at 84.42 yen.

Earlier in Asia, Japan's benchmark Nikkei 225 stock index rose 51.29 points, or 0.6 percent, to 9,114.13 and South Korea's Kospi edged up 0.2 percent to 1,780.02. Hong Kong's Hang Seng index added 0.5 percent to 20,971.50.

China's benchmark Shanghai Composite Index closed flat at 2,655.39, though tech stocks surged on a government announcement of plans to support development of clean energy and other fields.

Australia's S&P/ASX 200 gained 0.2 percent to 4,541.20.

Benchmark oil for October delivery was down $1.52 cents at $73.50 a barrel in electronic trading on the New York Mercantile Exchange.

[Associated Press; By PAN PYLAS]

AP Business Writer Joe McDonald in Beijing contributed to this report.

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