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Dollar and shares rally after US jobs report

Dollar and shares rally after US jobs report

(UPDATE) European stock markets were awoken from their slumber by a better-than-expected report on the US jobs market, which put paid to earlier minor share price declines.

The FTSE 100 leapt to life, climbing 0.3% to 5,917, having been stuck trading just a few points below the key 5,900 mark for most of the morning.

US stock market futures were also pointing upwards after the US labour report showed employment, or non-farm payrolls, had grown by 146,000 in November, much better than the expectation of 85,000 among economists.

The unemployment rate also fell from 7.9% to 7.7%.

The Labour department, which publishes the figures, said that Hurricane Sandy did not 'substantively' impact on the jobs markets in November.

‘Whether today’s relative strength in the labour market can continue is another question,’ commented James Knightley, an economist at ING Bank, ahead of next week’s Federal Reserve meeting, and amid ongoing negotiations to avert a ‘fiscal cliff’.

The dollar gained, rising 0.4% to 80.6 as measured against a basket of currencies. The euro conversely fell 0.5% to $1.2898, continuing a poor week for the single currency amid renewed concerns about the strength of the eurozone. A report published this morning showed that German industrial production fell by 2.6% in October.

In the UK, where the pound was trading down 0.2% at $1,6010, the news on manufacturing was similarly grim with a 1.2% fall in output in October.

Investors wary ahead of major economic reports (08:45)

Investors were biding their time on Friday morning ahead of a slew of reports on the state of the world’s two biggest economies which are due over the next two days.

The FTSE 100 continued this week’s lackadaisical trading, moving just 3 points to 5898. Other major European markets were equally flat.

The euro made a shift lower though, down 0.3% to $1.2929, continuing to suffer after European Central Bank president Mario Draghi yesterday emphasized the weakness of the eurozone economy.

Investors are waiting for this month’s US labour report this afternoon, with the non-farm payrolls number one of the most important gauges of US economic health.

Then tomorrow, a string of data on the performance of the Chinese economy in November is due, providing more evidence as to whether the economy has truly troughed.

Adding to market caution was breaking news of an 7.3 magnitude earthquake off the coast of northeastern Japan and subsequent tsunami warning.

Investors remained reluctant to take any big bets while 'fiscal cliff' negotiations continue in Washington to see if lawmakers can arrive at a deal to avoid a series of spending cuts and tax hikes beginning in January.

Overnight, Wall Street gained as shares in Apple rebounded from their biggest drop in four years, helping to boost technology shares.

Sweetener for investors

Of individual shares on the move in London, British food ingredients supplier Tate & Lyle (TATE.L) was the biggest riser on the FTSE 100. The Citywire Top Stock, a top 10 holding in the Schroder UK Alpha Plus fund run by Richard Buxton, gained 1.4% to 772p, after the group announced an agreement to insurer nearly half of its pension liabilities with Legal & General (LGEN.L), up 0.6p to 146.5p.

London-focused property developer Berkeley Group (BKGH.L) topped the mid-cap FTSE 250 index, up 6% to 1750p after announcing profits had increased by 40% in the first half of the year.

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