World markets volatile ahead of key US jobs data; consensus is for biggest gain in 26 years

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World stocks volatile ahead of key US jobs data

LONDON — World stocks were volatile Friday and the euro slid to a fresh four-year low against the dollar ahead of U.S. jobs figures, a key indicator for the world’s largest economy which often sets the tone in markets for a week or two.

In Europe, markets reversed earlier gains to trade lower — the FTSE 100 index of leading British shares was down 21.40 points, or 0.4 percent, at 5,189.78 while Germany’s DAX fell 22.46 points, or 0.4 percent, at 6,032.17. The CAC-40 in France was 20.70 points, or 0.6 percent, to 3,536.64.

Wall Street was also poised for a lower opening — Dow futures fell 79 points, or 0.8 percent, to 10,179 while the broader Standard & Poor’s 500 futures dropped 9.5 points, or 0.9 percent, to 1,094.10.

Meanwhile, the euro fell below $1.21 for the first time since April 2006, falling to a fresh low of $1.2090, having earlier been as high as $1.2215. By early afternoon London time, the euro had settled around the $1.2115 mark. The dollar typically acts as a safe have for investors in times of turbulence.

Trading activity in the run-up to the monthly U.S. nonfarm payrolls data is often volatile and the week’s end will likely hinge on how the figures defer from expectations.

The consensus in the markets is that employers added 513,000 jobs in May. Though that would be the biggest jump in 26 years, the increase is likely to have been swelled by the fact that as many as 300,000 people have of the workers hired during the month were expected to be temporary positions to help conduct the U.S. census.

“A number bigger than this could kick off another spurt upwards to finish the week on a more positive note,” said Anthony Grech, head of research at IG Index.

Anything bigger than anticipated will likely mean more consumption in the U.S., and more consumption would likely mean more growth — that could stoke expectations that the U.S. Federal Reserve could start raising borrowing costs sooner than anticipated.

Figures showing that the economy of the 16 countries that use the euro grew by 0.2 percent during the first quarter of the year from the previous three month period, despite a further big drop in output in debt-laden Greece, had little market impact as they were unrevised from the previous prediction.

Elsewhere, investors are keeping a close eye on the meeting of the Group of 20 finance ministers and central bankers in South Korea, for any indications that splits have emerged about the conduct of global economic policy, now that the global recession has ended.

Gareth Berry, an analyst at UBS, said fiscal consolidation and economic growth are likely to be the key subjects for the G-20 but that “talk of financial regulation could dampen any burgeoning risk sentiment for now.”

Earlier in Asia, Japan’s Nikkei 225 stock average fell 13 points, or 0.1 percent, to 9,901.19 amid news that Finance Minister Naoto Kan had been elected prime minister, replacing the deeply unpopular Yukio Hatoyama ahead of upper house elections in July.

In Hong Kong, the Hang Seng index shed 6.64, or less than 0.1 percent, to 19,780.07 while Australia’s benchmark retreated 0.8 percent to 4,449.40. South Korea’s Kospi advanced 0.1 percent to 1,664.13 and markets in Singapore, Thailand and the Philippines also gained.

China’s Shanghai Composite Index closed flat at 2,553.59 amid concerns that rapid economic growth might slow if Europe’s debt troubles hurt demand for exports.

Benchmark crude for July delivery was up 3 cents at $74.64 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose $1.75 to settle at $74.61 on Thursday.

Associated Press researcher Bonnie Cao in Beijing contributed to this report.