Sun, Apr 03, 2005 - Page 10 News List

European markets surge as fear of US inflation eases

AFP , LONDON

European stock exchanges sprinted ahead on Friday on a strong start to the day on Wall Street and in response to sluggish US job growth, which eased fears of an inflationary spurt in the US.

The London FTSE 100 index gained 0.40 percent to close at 4,914, while in Paris the CAC 40 rose 0.30 percent to 4,080.08. In Frankfurt the DAX added 0.57 percent to end the week at 4,373.53.

The DJ Euro STOXX 50 index of leading eurozone shares climbed 0.18 percent to 3,061.11.

On the currency market the dollar shrugged off disappointing US job creation data for last month as well as reports of soft US manufacturing activity and edged higher against the euro here Friday.

On Wall Street an early rally fizzled as market jitters on inflation re-emerged despite weaker-than-expected data on US job growth.

The market opened on an upbeat note with investors taking the weak labor market report as a positive sign, due to easing inflationary pressures that might force the Federal Reserve to aggressively boost interest rates.

The data showed the US economy added a modest 110,000 jobs last month, well short of the 220,000 expected on Wall Street.

"It is a disappointing report in terms of employment growth but for the moment it does relieve the fear of a more aggressive Fed," said Peter Cardillo, chief market analyst at SW Bach.

However, the impact quickly faded after a report that revived inflation fears from the Institute of Supply Management.

The ISM index on the factory sector dipped slightly to 55.2 percent in March from 55.3 percent in February, holding above the level of 50 that separates expansion and contraction.

But more worrisome, the prices component of the index showed a faster pace of growth -- 73 percent from 65.5 a month earlier.

"Price inflation continues to present a problem for manufacturers as the prices index gained significant momentum," the ISM said.

In London mining issues were well-supported.

Anglo American gained 1.04 percent to reach £12.68 and BHP Billiton was up 1.69 percent at the close at £7.23.

In Paris a report that sales on the French automobile market rose 2.5 percent in March from the same month last year pushed Renault up 1.31 percent to 69.80 euros while rival PSA Peugeot Citroen gained 1.29 percent to finish at 49.65 euros.

In Frankfurt DaimlerChrysler fell 0.49 percent to finish at 34.36 euros on reports that around 700 jobs would be eliminated this year at its loss-making Smart car division as part of a restructuring.

Elsewhere in Europe share prices rose 0.55 percent on the SP/MIB in Milan, 0.36 percent to 5,950.88 on the Swiss Market Index, 0.33 percent to 9,289.5 on the IBEX-35 in Madrid and 0.47 percent to 3,140.33 on the BEL-20 in Brussels.

The AEX index in Amsterdam slipped 0.37 percent to close at 368.20.

This story has been viewed 2373 times.
TOP top