European Equities Rally After Sliding On Payrolls Data

 
   By Alen Mattich 
   Of DOW JONES NEWSWIRES 
 

LONDON (Dow Jones)--European equity markets rallied after initially taking fright Friday at further evidence the global recovery may be short-lived, or at least less robust than investors had begun to believe.

Much worse than expected U.S. non-farm payrolls data compounded the message of weak Chicago PMI data Wednesday and a collapse in U.S. car sales Thursday. Together, the numbers suggested the world's consumer of first and last resort isn't picking himself off the floor anytime soon.

The data also encouraged some profit-taking after what has been a historic run-up in most global equity markets. Even bullish investors were beginning to have doubts about the speed and magnitude of the risk-markets' recoveries during recent months.

In London, the FTSE 100 index of leading London shares fell to just under 4955 half an hour after the payrolls data. However, by 1430 GMT it had rallied to 5014, down just 0.7% on the day. Frankfurt's DAX was down 1.2% at 5490 and Paris's CAC-40 was down 1.4% at 3669.

Bonds gained ground as the data reinforced deflationary expectations and the view that central banks would keep rates lower for longer, notwithstanding a pickup in activity during the second half of this year.

However, as with equities, the initial move was reversed and by 1440 GMT December bund futures were up just 0.24 at 122.56 after an earlier high of 122.97 just after the employment report was released.

In the currency markets, the dollar gained ground initially, lifted by the safety trade and a view that if the U.S. economy turns bad, others won't look much better. However, it then fell sharply and by 1445 GMT the euro was up to $1.4627 from $1.4546 at the Thursday New York close and $1.4480 just after the data.

-By Alen Mattich, Dow Jones Newswires; +44-20-7842-9286; alen.mattich@dowjones.com

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(END) Dow Jones Newswires

October 02, 2009 10:53 ET (14:53 GMT)


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