adminDepartment announced that the US economy added 175 000 jobs in May, scotching worries that job creation had slumped in the spring but not likely so strong as to push the US Federal Reserve to begin tapering its monetary stimulus programme.
London’s FTSE 100 index of leading shares rose 0,47 percent to stand at 6 365,82 points in midday deals. Frankfurt’s DAX 30 index climbed 0,51 percent to 8 140,35 points and in Paris the CAC 40 rose 0,64 percent to 3 838,56 points. Milan rose by 0,35 percent but Madrid gave up 0,22 percent.
Markets have been eagerly awaiting the May job creation numbers as an indicator of the strength of the recovery in the world’s top economy.
Fed chief Ben Bernanke indicated last month that the US central bank could soon begin cutting back on the amount of stimulus it injects into the economy by buying bonds and other assets in a programme known as quantitative easing but would not want to jeopardise the recovery.
Since then the markets have been looking at economic data through the prism of its impact on monetary policy.
“Another solid payrolls number, but the Fed will probably need to see stronger numbers before tapering of asset purchases gets closer to reality,” said Berenberg Bank analyst Robert Wood.
The Fed has said it would shift policy if unemployment drops to 6,5 percent. Last week’s report showed unemployment inched up 0,1 percent to 7,6 percent.
Wood said the US economy has coped well so far with mandated government spending cuts, but these could hit growth later in the year.
“The Fed is unlikely to taper the monetary stimulus until it has a clearer view on that,” he added. US stocks also advanced on the jobs data. Ten minutes into trade, the Dow Jones Industrial Average was up 0,33 percent to 15 090,49 points, while the broad-based S&P 500 put on 0,31 percent to 1 627,51 points, and the tech-rich Nasdaq Composite Index added 0,19 percent to 3 430,65 points.
Briefing.com analyst Patrick O’Hare said the jobs report “reflects improvement in the economy, but not so much improvement as to suggest the Fed will alter its policy course”.
A market note from Charles Schwab & Co. characterised the jobs report as “lukewarm” and was “tempering Federal Reserve asset purchase tapering talk”.
Back in Europe, the Bundesbank said Friday that the economic outlook for Germany is brightening, as improved trade data suggested Europe’s biggest economy is slowly leaving its recent weakness behind it.
The Bundesbank predicted on Friday that German gross domestic product would expand by 0,3 percent in 2013 and 1,5 percent in 2014. That represents a slight downward revision from the previous forecasts in December when the central bank had been pencilling in growth of 0,4 percent and 1,9 percent respectively.
In forex markets, the euro slid to US$1,3211 from US$1,3243 late in New York.
The dollar dropped to 96,74 yen from 97,07 yen. – AFP.
Online Reporter