Europe close: Shares rebound on US payrolls, strong Wall St

(Sharecast News) - European shares rebounded to close higher after three straight days of losses as US non-farm payrolls data lent weight to the case for a pause in Federal Reserve rate rises while a strong Wall Street start on the back of strong results from Amazon also boosted sentiment.



The pan-regional Stoxx 600 finished 0.29% higher at 459.28, with all major bourses in the green.

The US economy added fewer new jobs than expected last month, with official data showing non-farm payroll rose by 187,000 in July, below forecasts of an increase of 200,000.

The figure for June was also revised lower to 185,000 from 209,000, while May's number was reduced by 25,000 to 281,000, meaning fewer jobs were created in the spring than first thought, according to data from the US Bureau of Labor Statistics.

It also reported that the unemployment rate fell to 3.5%, down from 3.6% in June.

Average hourly earnings were up 0.4%, or 14 cents, higher than the 0.3% expected to $33.74, but this was offset by a slight fall in the number of hours available.

The dollar weakened after the news, pushing the pound up by half a cent to $1.277.

"The July jobs report is just one datapoint before the September FOMC meeting, but we think it offers enough evidence of cooling labour market conditions to weigh in favour of no additional rate hikes. However, an upside surprise in any of the forthcoming data on the labour market and inflation would put another rate hike back on the table," said Nancy Vanden Houten, lead US economist at Oxford Economics.

CMC Markets analyst Michael Hewson said: "European markets have struggled for gains initially today, at the end of what has been a difficult week overall as concerns over earnings guidance downgrades and rising long term yields weighed on broader market sentiment."

"A mixed US jobs report appears to have stabilised sentiment, pulling the DAX and FTSE100 off their lows, after another slowdown in jobs growth in July and downward revisions to previous months, spoke to the idea that central bank rate hikes have done their job, and that no more are coming."

In economic news, construction activity in the eurozone entered a "sharp and accelerated decline" last month according to key survey data released on Friday.

The S&P Eurozone Construction purchasing managers index (PMI) - a seasonally adjusted index tracking monthly changes in total industry activity - dropped to 43.5 from 44.2 month on month - in the sharpest contraction seen in the year to date, and extended the current sequence of reduction to 15 months.

German factory orders rose 7% in June compared with the previous month, beating expectations of a 2% fall.

Eurozone retail sales dropped 0.3% month on month in June, worse than expectations of a 0.3% rise.

On the equities front, shipping giant AP Moeller-Maersk fell after it warned of a steeper decline in global demand for shipping containers by sea this year prompted by muted economic growth and customers reducing inventories.

Credit Agricole gained after positive quarterly results.

Advertising giant WPP fell after cutting growth forecasts as first-half profits slumped.

Reporting by Frank Prenesti for Sharecast.com