Stocks up as investors turn attention to US jobs

AP News
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Posted: Mar 30, 2011 8:48 AM
Stocks up as investors turn attention to US jobs

Stock markets were buoyant Wednesday despite concerns over Japan's nuclear crisis, as investors turned their attention towards a raft of upcoming U.S. economic data.

After focusing for weeks on Japan's devastating earthquake and tsunami as well as the uprisings in the Arab world, traders are turning their attention to fundamental economic indicators, such as the pace of global economic expansion and the trajectory of interest rates.

"The two big geopolitical stories _ the aftermath of the earthquake in Japan and unrest in Libya _ remain very much in play but with the backdrop not changing significantly on a day-by-day basis, it does seem as if markets are now keen to try and turn the page," said Ben Potter, research analyst at IG Markets.

The most important piece of economic data this week will be Friday's U.S. nonfarm payrolls report for March _ the figures often set the stock market tone for a week or two after their release. They could have an even bigger impact this time as investors gauge when the U.S. Federal Reserve will start raising interest rates.

Recent comments from Fed officials have indicated that interest rates may rise sooner than the markets had previously been anticipating. That has been reflected in the recent subdued performance in U.S. Treasuries.

At the moment the consensus in the markets is that payrolls rose by 190,000 during March but that the unemployment rate, which is based on a separate survey, was unchanged at 8.9 percent.

Figures from the ADP payrolls firm did little to alter expectations. The 201,000 increase in private payrolls reported by ADP was more or less in line with market expectations for a 210,000 rise.

"We don't look for any change to the median forecast of 190,000 for total nonfarm payrolls and 210,000 for private payrolls," said Joshua Shapiro, chief U.S. economist at MFR Inc.

The in-line figures had little impact on markets.

In Europe, the FTSE 100 index of leading British shares was up 0.4 percent at 5,957 while Germany's DAX rose 1.7 percent to 7,049. The CAC-40 in France was 0.8 percent firmer at 4,021.

Wall Street was also poised for a solid opening _ Dow futures were up 44 points at 12,269 while the broader Standard & Poor's 500 futures were up a little over 5 points at 1,322.

The prevailing view in the markets is that the Fed won't start to raise its main interest rate from the current 0-0.25 percent range unless there is clear evidence that employment is increasing and that the unemployment rate is heading down to 7 percent.

The dollar's fortunes this year will likely hinge to a large extent on what happens to U.S. interest rates. One of the reasons why the dollar has underperformed over the past few months is the expectation that other central banks, such as the European Central Bank and the Bank of England, will be tightening policy sooner than the Fed.

By mid afternoon London time, the dollar was 0.7 percent firmer at 83 yen while the euro was 0.1 percent lower at $1.4095.

The euro was hurt somewhat by figures showing economic confidence in the 17 countries that use the euro slipped modestly in March. Eurostat, the EU's statistics office, revealed that its main economic sentiment indicator fell 0.6 points to 107.3. Though the fall was bigger than anticipated and the sharpest decline since May 2010, the indicator remains at relatively high levels compared with the last few financial crisis years.

Earlier in Asia, Tokyo's benchmark Nikkei 225 index rose 2.6 percent to 9,708.79, its highest level since March 11, when the post-earthquake tsunami smashed into the country's northeast _ upending entire cities, killing thousands of people and causing a nuclear power plant to malfunction and leak toxic radiation into the air, water and soil.

The Nikkei was boosted by a steadily weakening yen and data showing the country's industrial production climbed for the fourth straight month in February. Still, the government warned that industrial production would fall sharply as the effects of the tsunami and the earthquake that spawned it were felt.

Elsewhere, Hong Kong's Hang Seng index rose 1.7 percent to 23,451.43, South Korea's Kospi added 0.9 percent to 2,091.38. Shares in Singapore, Taiwan and New Zealand were also higher. Australia's S&P/ASX 200 rose 1.4 percent to 4,822.20.

Bucking the trend were indexes on mainland China. The Shanghai Composite Index dropped slightly to 2,955.77, and the smaller Shenzhen Composite Index declined 0.8 percent to 1,264.59.

In the oil markets, the focus remained very much on Libya, where forces loyal to longtime leader Moammar Gadhafi pushed rebels back. There is a growing feeling that the rebels may not be able to oust Gadhafi militarily unless already contentious international airstrikes go further in taking out his forces.

The uncertainty is keeping oil prices elevated _ Libya accounts for a little under 2 percent of global oil production.

A barrel of crude on the New York Mercantile Exchange was down 44 cents at $104.35 while the equivalent Brent rate in London fell 35 cents to $114.61.

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Pamela Sampson in Bangkok contributed to this report.