Friday, August 6, 2010

Stocks rise, dollar flat as US jobs data looms

LONDON: Pending U.S. jobs data kept investors on edge on Friday, Aug 6 but not enough to stall the mid-year rally in global equities boosted by robust earnings.

In commodities markets, U.S. wheat futures jumped around 6 percent, taking weekly gains to some 25 percent after Russia's move to temporarily halt grain shipments sparked a buying frenzy. World stocks as measured by MSCI rose 0.3 percent for a gain of around 12 percent since the end of June. The Thomson Reuters global stock index rose 0.2 percent.

European shares led the way with the FTSEurofirst 300 gaining 0.4 percent.

Investor sentiment has been boosted by a series of generally positive earnings reports, particularly from the banking sector.

Among the latest were part-nationalised RBS in Britain, which reported a second-quarter operating profit of 869 million pounds and Europe's biggest insurer Allianz, which missed expectations with second-quarter net profit of 1 billion euros ($1.31 billion) because of lower asset sales but had stronger-than-expected operating profit.

The key focus on markets for the day, however, was the U.S. non-farm payrolls report for July at 1230 GMT, which will act as a snapshot of how strong or weak the U.S. economic recovery is.

"The U.S. data is very important. If the market reacts positively and closes near a new high this week, then we have a very good chance to go higher," said Giuseppe-Guido Amato, strategist at Lang & Schwarz in Frankfurt.

Economists polled by Reuters expect Friday's U.S. Labor Department report to show a drop of 65,000 in non-farm payrolls in July, hurt by the unwinding of the government's hiring for the census. Private employers, however, are expected to have added 90,000 jobs.

Data on Thursday showed new U.S. claims for unemployment benefits unexpectedly rose last week to the highest level since early April, pushing stocks on Wall Street lower.


The dollar hobbled near a 3 1/2-month low versus a currency basket ahead of the U.S. jobs report.

Currencies overall were little changed as many traders steered clear of big positions before the data, leaving the dollar near a three-month low against the euro and an eight-month trough versus the yen hit earlier in the week.

"We expect a (jobs) number slightly better than consensus, but it's questionable whether this will help the dollar as interest rates are so low and we have a divergence of softer U.S. economic data and stronger European data," said Marcus Hettinger, global currency strategist at Credit Suisse in Zurich.

The euro was at $1.3191.

Euro zone government bond yields were slightly higher on the day

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