World stock markets recover poise after US jobs survey, ahead of government data Friday

Stock markets recover poise after US jobs survey

LONDON — Better-than-expected U.S. economic data helped Europe’s stock markets clamber off lows and contributed to gains on Wall Street as investors gear up for the closely watched U.S. jobs report for July on Friday.

In Europe, Germany’s DAX closed up 23.42 points Wednesday, or 0.4 percent, at 6,331.33 while the CAC-40 in France rose 13.21 points, or 0.4 percent, to 3,760.72. The FTSE 100 ended 10.32 points, or 0.2 percent, lower at 5,386.16.

Meanwhile on Wall Street, the Dow Jones industrial average was up 28.76 points, or 0.3 percent, at 10,665.14 soon after the open while the broader Standard & Poor’s 500 index rose 3.83 points, or 0.3 percent, to 1,124.29.

Europe’s markets had been trading lower while Wall Street was heading for a modest decline up until figures from the ADP payrolls firm revealed that private sector employment in the U.S. swelled by 42,000 in July — the sixth straight monthly improvement. July’s gain was up from 13,000 the month before and ahead of market expectations.

Though the ADP survey is in positive territory, there are few indications that a major acceleration in job creation is taking place, so expectations for this Friday’s government numbers have not budged too much. The payrolls numbers often set the market tone for a week or two, particularly in August, when trading volumes slump, particularly in the U.S. and Europe.

A modest improvement in the monthly non-manufacturing survey from the Institute for Supply Management also helped sustain the buying momentum through the session. ISM, which earlier this week indicated that the slowdown in the manufacturing sector was not as pronounced as many economists were fearing, said its non-manufacturing index for July rose to 54.3 from 53.98 — anything above 50 indicates expansion.

“The survey is consistent with continued sub-trend growth in the second half of the year, but there is nothing here to suggest a double-dip recession is coming,” said Paul Ashworth, senior U.S. economist at Capital Economics.

At the moment, U.S. economic figures are the main driver across all markets.

Despite the fairly encouraging ISM surveys, the bulk of the economic news out of the U.S. has been disappointing.

If the payrolls data come in below expectations for a decrease of 55,000, which includes the loss of one-off census jobs earlier this year, then the markets will be on the lookout for additional money-boosting measures from the Federal Reserve. Most economists though doubt that the rate-setting panel will decide to get anything done so quickly.

If the Fed turns on the taps once again, then most currency strategists think the dollar will be undermined further, after falling to a four-month low against the euro on Tuesday.

By late afternoon London time, the euro was down 0.6 percent at $1.3152. On Tuesday, it went as high as $1.3261.

While the dollar has been pressured by the evidence showing the U.S. economy is losing momentum, the euro has recovered its poise as the government debt crisis has eased and the economic newsflow out of the 16 countries that use the currency has generally outperformed expectations.

“What is clear is that the focus of concerns has moved very clearly from the eurozone towards the U.S.” said Simon Derrick, senior currency strategist at Bank of New York Mellon.

One sector that stubbornly fails to match the improvements seen elsewhere, though, is consumer spending.

Eurostat, the EU’s statistics office, said retail sales in the eurozone were flat in June from the previous month, down from a 0.4 percent rise booked in May. June’s outcome was in line with expectations after figures showed that sales in Germany and France fell sharply, and means retail sales were only 0.4 percent higher in June than the year before.

The figures came out a day ahead of the European Central Bank’s expected decision to leave its key interest rate unchanged at 1 percent. Though its president Jean-Claude Trichet is expected to sound a more optimistic tone in his press conference, he is likely to point to the hurdles the eurozone economy faces, not least the fact that consumers are holding back from major purchases even though separate figures last week showed consumer confidence running at a 26-month high.

The worry is that consumer spending may get pressured by the austerity measures being enacted across the eurozone in response to the government debt crisis.

Earlier, stock markets in Asia had been mixed.

While Japan’s Nikkei 225 stock average closed own by 204.67 points, or 2.1 percent, to 9,489.34, the Shanghai Composite Index added 0.4 percent to 2,638.52 and Hong Kong’s Hang Seng advanced 0.4 percent to 21,549.88.

Other gainers included India, Taiwan and Malaysia. Markets in Singapore, Indonesia, New Zealand and Australia lost ground.

Benchmark crude for September delivery was down 6 cents to $82.49 a barrel in electronic trading on the New York Mercantile Exchange.