GLOBAL MARKETS: U.S. Stocks Seen Higher; Payrolls Key

GLOBAL MARKETS: U.S. Stocks Seen Higher; Payrolls Key
    By Ishaq Siddiqi    Of DOW JONES NEWSWIRES  

LONDON (Dow Jones)--U.S. stocks are tipped to start Friday's session on a positive note, though much will depend on the key nonfarm payrolls data for February to be released an hour before the open.

"We are seeing some speculative buying interest ahead of the (payrolls) data, suggesting that an atrocious number is already priced in, so the potential for surprise is lying with a better-than-expected number," said Martin Slaney, head of derivatives at GFT.

Slaney called the Dow Jones Industrial Average 41 points, or 0.6%, higher at 6635.44, and the broader Standard & Poor's 500 index up 5.8 points, or 0.8%, at 688.35.

"The report comes at a time when the markets are in severe distress (and) it doesn't get much more important than this. There is an aura of make-or-break for the markets over these jobs numbers," said Slaney.

Employment in the U.S. is forecast to fall by 652,000 in February, according to a Dow Jones Newswires survey.

"The pace of job losses has picked up significantly in recent months and anecdotal evidence provides scant indication that a bottom is near," said Kenneth Broux, economist at Lloyds Banking Group.

Broux estimates that the world's largest economy lost 700,000 jobs in February, while the unemployment rate rose to 8.0%, the highest since January 1984.

"The data will clearly raise the pressure on policymakers to provide further reassurances that the downturn can be arrested, possibly underpinned by some new measures in coming days," said Broux.

In Europe, stock indexes were lower as investors nervously awaited the release of the payrolls report.

At 1100 GMT, the pan-European Dow Jones Stoxx 600 index was down 0.7% at 160.41. London's FTSE 100 index was down 0.2% at 3523.67 and Frankfurt's DAX index was down 0.6% at 3674.05. The CAC-40 index in Paris was down 0.9% at 2546.17.

Fears that a worse-than-expected payrolls figure could surface later in the session brought an element of risk aversion back into the market, boosting European bond prices and the spot price of gold.

Banking stocks were under particular pressure early Friday, after shares in Citigroup fell below $1 on Wall Street overnight, raising concerns over the health of the global financial system. Shares in Societe Generale fell 8.0% to EUR19.56, while shares in BNP Paribas declined 7.7% to EUR21.20. The pan-European Dow Jones Stoxx 600 banks index was off 3.2%.

Earlier, Asian share markets were sharply lower Friday, as investors remained cautious ahead of the jobs data. Japan's Nikkei 225 was the worst performer, down 3.5%, while Hong Kong's Hang Seng index was off 1.7%.

In the European foreign exchanges, the euro and the pound were higher in early business. Ahead of the U.S. jobs report later in the day, trading was thin as players refrained from pushing currencies one way or the other, dealers said.

At 1105 GMT, the euro was trading at $1.2674, up from $1.2540 in late New York business Thursday. Sterling was quoted at $1.4235, up from $1.4128, and the dollar was weaker at 96.76 yen, down from 98.07.

Spot gold edged higher, rising to $939.50 per troy ounce from $933.00 late Thursday. In the oil market, April Nymex light, sweet crude was trading at $44.40 per barrel, up from $43.61.

June bund futures gained 1.01 to 125.16 while June gilt futures were up a hefty 2.47 at 124.07. In the equity futures market, the March DJIA contract was down 0.2% at 6614, while the March S&P 500 contract was 0.1% lower at 685.10.

On the economic front, the nonfarm payrolls data are released at 1330 GMT, while consumer credit for January is expected at 2000 GMT.

-By Ishaq Siddiqi, Dow Jones Newswires; +44-20-7842-9488; [email protected]

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(END) Dow Jones Newswires

March 06, 2009 06:10 ET (11:10 GMT)

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