US jobs data fail to boost stocks further

AP News
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Posted: Mar 04, 2011 9:27 AM
US jobs data fail to boost stocks further

In-line U.S. jobs figures on Friday failed to boost stocks any further, with most indexes set to end the week with little momentum after sharp gains the previous day.

The Labor Department reported that the U.S. economy generated 192,000 jobs in February, up from January's 63,000 but in line with expectations following forecast-busting surveys earlier in the week. The unemployment rate fell for the third month running to a near two-year low of 8.9 percent, largely because people are dropping out of the labor force.

Though the payrolls figures are often subject to big revisions on a monthly basis, they are routinely at the heart of financial markets' attentions, especially at a time when investors are trying to work out when the Federal Reserve may start raising interest rates once again.

The prevailing view is that the Fed will continue to pump more money into the U.S. economy and keep its main interest rate near zero percent until there is clear evidence that the unemployment rate is heading down towards 7 percent.

Stock gave up some of their earlier gains following the figures.

In Europe, the FTSE 100 index of leading British shares was up 0.3 percent at 6,022 while Germany's DAX rose 0.2 percent to 7,240. The CAC-40 in France was 0.4 percent lower at 4,046.

Wall Street was poised for a mostly flat opening _ Dow futures were up 11 points at 12,250 while the broader Standard & Poor's 500 futures was more or less unchanged at 1,330.

In the currency markets, traders were still grappling with the repercussions from Thursday's heavy hint from European Central Bank chief Jean-Claude Trichet that the bank may increase interest rates next month _ way earlier than anticipated.

Speaking after the bank left its main interest rate unchanged at the record low of 1 percent, Trichet said "strong vigilance" was warranted and that an interest rate increase next month was "possible" though "not certain."

Those comments prompted a sizable rally in the euro as the markets had not been positioned for a rate hike so soon _ in fact, the expectation was that rates would remain on hold until the tail-end of the year.

After sharp gains on Thursday, the euro lost momentum and was trading flat at $1.3955.

Derek Halpenny, European head of global currency research at the Bank of Toky0-Mitsubish UFJ, said an April rate hike is now a "done deal" and is fully priced in by the markets.

However, he said it's notable that the one cent advance Thursday was well within a normal trading day's range and does "suggest that a significant amount of what is now expected by the ECB in the rates market is fully priced in the foreign exchange market."

As such, he said the euro's advance towards $1.40 and above could be a "slow grind."

Earlier in Asia, the Nikkei 225 stock average, Japan's main benchmark, climbed 1 percent to close at 10,693.66, while South Korea's Kospi jumped 1.7 percent to 2,004.68.

Hong Kong's Hang Seng added 1.2 percent to 23,408.86. In China, Shanghai's Composite Index ended the week at its highest level so far this year, gaining 1.4 percent to 2,942.31. The Shenzhen Composite Index of China's smaller, second exchange rose 1.1 percent to 1,286.22.

Hovering in the background is the crisis in Libya as Gadhafi tries to claw back some ground and protests against his regime in the capital city of Tripoli.

As a result, oil prices continued to rise, with the New York rate up $1.22 at $103.15 a barrel while the equivalent Brent rate in London rose 96 cents to $115.75 a barrel.

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Pamela Sampson in Bangkok contributed to this report.