Europe finds comfort in job report

March 8, 2002 Posted: 1:19 PM EST

LONDON, England - European markets ended higher on Friday after strong U.S. job numbers lifted sentiment, providing more evidence of a recovery for the world's biggest economy.

The data, which showed the jobless rate fell to 5.4 percent in February, overshadowed earlier concern in the markets over U.S. interest rates. Those worries surfaced on Thursday in response to Federal Reserve Chairman Alan Greenspan's comment that the economic recovery was "well under way."

Many investors interpretted that to mean the central bank would start raising rates sooner than expected to stop the economy from growing too quickly.

"The payrolls are better than expected and the particularly encouraging thing is that the U.S. unemployment rate has fallen for two months in a row," Mark Wall, an economist at Deutsche Bank in London, told Reuters.

"If what we're seeing in the U.S. labour market holds, it's just what the consumer needs. The best way to support the consumer is to make them feel good about their jobs."

London's FTSE 100 edged up 0.1 percent to 5,285.7 and the CAC 40 blue chip index in Paris rose 0.3 percent to 4,629.11, while Frankfurt's electronically traded Xetra Dax was up 1.1 percent at 5,346.89 in late trading (the German market was set to close at 1900 GMT).

The pan-European FTSE Eurotop 300, a broader index of the region's largest stocks, added 1 percent, led by tobacco stocks.

British American Tobacco was the top performer in London, jumping 4.3 percent as investors continued to pile into the sector after Imperial Tobacco said on Thursday that it was buying Reemtmsa, the world's fourth largest tobacco group. Imperial Tobacco closed up 3.2 percent in London.

Europe's biggest biotech group, Serono, jumped 13.6 percent after the Swiss company received U.S. approval for its key drug, Rebif, which is used in the treatment of multiple sclerosis.

In the tech sector, French telecoms equipment maker Alcatel rose 2.1 percent, while software company Dassault Systemes added 2.7 percent in Paris.

Ericsson, the world's biggest supplier of mobile phone networks, and Nokia, the world's largest mobile phone maker, were both up about 4 percent. They initially fell after Merrill Lynch forecast that capital spending by telecom companies would drop 5 percent in 2003 from 2002.

LVMH, the world's biggest maker of luxury goods, ended 0.1 percent higher after falling initially as it said net profits plunged to 10 million euros from 722 million. But analysts said that stripping out the major provisions made for restructuring at its Sephora and DFS units, the group's operating profits were in line with expectations.

Among Europe's smaller markets, Amsterdam's AEX index rose 0.2 percent, while Milan's MIB30 index added 0.9 percent and the SMI in Zurich gained 1.4 percent.

In the U.S. on Friday, a report showing an end to six months of job cuts boosted stocks, propelling indexes higher on hopes that an economic recovery is in the pipelines. The data showed U.S. unemployment fell last month and the number of jobs grew for the first time in seven months.

At midday, the Dow Jones industrial average was up lo122.54 points, or 1.2 percent, to 10,647.91, while the tech-laden Nasdaq composite index jumped 50.23 points, or 2.7 percent to 1,931.86.

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