By Sara Sjolin, MarketWatch
LONDON (MarketWatch) -- After briefly dipping into negative
territory, European stock markets moved firmly higher on Friday
after U.S. data showed the unemployment rate fell in January,
although the nonfarm-payrolls report missed forecasts.
The Stoxx Europe 600 index rose 0.7% to end at 325.09, building
on gains from Thursday, when the benchmark posted its biggest
advance since Dec. 19. For the week, it gained 0.8%.
The rally on Thursday came after the European Central Bank left
its key lending rate at a record low of 0.25%, although ECB
President Mario Draghi reiterated a pledge to take further easing
action if needed.
The Stoxx 600 wobbled around the flat line on Friday immediately
after U.S. jobs data painted a mixed picture of the country's labor
market, but the benchmark ended up moving firmly higher. The
nonfarm-payrolls report showed 113,000 jobs were added to the
economy in January, falling short of the 190,000 expected by
economists polled by MarketWatch. Meanwhile, the unemployment rate
dropped to 6.6% -- the lowest since October 2008--from 6.7%, while
the participation rate edged up to 63% from 62.8%.
"Recent economic data has been softer than expected, but the
degree to which it was attributable to poor weather conditions
remains unclear. While markets have reacted, it's too soon to
conclude that the data signals anything more than a temporary
weakening in the pace of growth," said Jim Baird, chief investment
officer at Plante Moran Financial Advisors, in a note.
He also pointed out that the jobs report in itself is unlikely
to be enough to deter the Federal Reserve from continuing to reduce
its asset purchases. The Fed started reducing its asset-purchase
program in December and made further cuts in January, leaving the
monthly purchases at $65 billion.
U.S. stocks traded higher on Wall Street.
In Europe, Germany's DAX 30 index rose 0.5% to 9,301.92, closing
out the week 0.1% lower.
The U.K.'s FTSE 100 index picked up 0.2% to 6,571.68, ending the
week with a 0.9% gain. France's CAC 40 index advanced 1% to
4,228.18 for a 1.5% weekly rise.
The indexes had trimmed losses in early-morning trade after
Germany's constitutional court referred the legality of the
European Central Bank's Outright Monetary Transactions program to
the European Court of Justice. The German court argued that the OMT
program likely exceeded the central bank's powers, although the ECB
rebuffed the claim and said on Twitter the measure "falls within
its mandate."
Among notable movers in Friday's action in Europe, shares of
ArcelorMittal rose 0.8% after the French steelmaker said its loss
narrowed in the fourth quarter, helped by cost saving and a rise in
steel and iron-ore shipments. Peer firm ThyssenKrupp AG gained
2.5%.
Shares of Tate & Lyle PLC gained 1.8% after J.P. Morgan
Cazenove lifted the sugar producer to overweight from underweight.
The analysts said the company is poised to return to strong volume
growth, with new technologies such as natural sweeteners providing
further upside.
UniCredit SpA picked up 3.6% after Citigroup raised the bank to
buy from neutral.
On a more downbeat note, shares of Skanska AB dropped 2.5% after
the Swedish construction firm reported fourth-quarter profit and
revenue below analyst expectations.
Shares of SBM Offshore NV slid 12% on growing concerns over an
investigation into potentially improper sales practices.
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