U.S. data pushes European shares to 6-month high

LONDON (BestGrowthStock) – European shares hit their highest close in more than six months on Friday as better than expected U.S. jobs data boosted hopes that the world’s biggest economy is recovering, with miners among the best performers.

The pan-European FTSEurofirst 300 (.FTEU3: ) index of top shares provisionally closed 0.4 percent higher at 1,111.28 points – its highest level since mid-April and closed 2.3 percent higher for the week.

“A good end to the week, what we had been waiting for with the U.S. Federal Reserve decision (to boost the money supply) and the U.S. jobs data,” Giuseppe-Guido Amato, strategist at Lang & Schwarz in Frankfurt, said.

“Quarter-three numbers have also been inline or above expectations. We are positioning on the long-side.”

U.S. non-farm payrolls rose a solid 151,000 in October, the first gain since May, a government report showed on Friday. Private hiring rose by 159,000, while the government cut 8,000 jobs.

Miners tracked metal prices higher as demand for riskier asset classes grew after the U.S. jobs data. Vedanta Resources (VED.L: ), Antofagasta (ANTO.L: ) and Eurasian Natural Resources (ENRC.L: ) rose 2.5 to 5.9 percent.

According to Thomson Reuters StarMine data one-year forward forecast earnings growth for the STOXX Europe 600 basic materials sector index (.SXPP: ) is one of the highest at 41.8 percent, which compares with the overall STOXX Europe 600 (.STOXX: ) index at 18 percent.

Strong corporate results helped give drugmakers a boost. Smith & Nephew (SN.L: ), rose 5.2 percent after Europe’s largest maker of replacement knees and hips reported forecast beating third-quarter results.

GlaxoSmithKline (GSK.L: ) gained 2.8 percent as worries about generic competition to its best-selling Advair lung drug eased, following comments from Israeli-based drugmaker Teva (TEVA.O: ).

BANKS, ROLLS-ROYCE HIT

On the downside, banking shares were weaker, with some euro zone banks falling on renewed sovereign debt concerns. Bank of Ireland (BKIR.L: ) (BKIR.I: ) was the worst hit, down 10.4 percent while the Thomson Reuters Peripheral Eurozone Countries share index (.TRXFLDPIPU: ) was down 2.5 percent.

Royal Bank of Scotland (RBS.L: ) slipped 4.5 percent after it said it expected challenging market conditions in the fourth quarter.

Aero-engines maker Rolls-Royce (RR.L: ) also fell, down 4.9 percent after airline Qantas’s chief executive Alan Joyce said a faulty part or design issue may have caused the explosion in an engine on a Qantas Airways (QAN.AX: ) Airbus A380 that forced an emergency landing in Singapore.

MARKET MOMENTUM

Looking ahead, some analysts said the Fed’s further stimulus measures had set the ground for the stock market to go higher in the remaining months of the year.

“One has to feel a sense of reservation about what’s going on, but you can’t ignore momentum, which just seems to be one way at the moment,” said Mike Lenhoff, chief strategist at Brewin Dolphin.

“The bad news could be ignored in the short term. The view is that here is a central bank that is prepared once again to ensure that the economy does not relapse into recession.”

The one-year forward price-to-earnings ratio on the STOXX Europe 600 (.STOXX: ) index currently stands at 10.7, below the 10-year average of 13.4 times, Thomson Reuters Datastream showed.

Across Europe the FTSE 100 (.FTSE: ) index was 0.2 percent higher, Germany’s DAX (.GDAXI: ) gained 0.3 percent and France’s CAC 40 (.FCHI: ) was flat.

(Editing by Greg Mahlich)

U.S. data pushes European shares to 6-month high