U.S. jobs data boosts European shares

By Joanne Frearson

LONDON (Reuters) – European shares hit its highest close in just over three weeks on Friday after strong U.S. jobs data supported the view the global recovery was on track, while technicals also pointed to a more bullish trend.

The pan-European FTSEurofirst 300 (.FTEU3: Quote, Profile, Research) index of top shares closed up 1.5 percent at 1,141.40 points. Prospects for technicals brightened after the euro zone’s blue chip Euro STOXX 50 (.STOXX50E: Quote, Profile, Research) index moved above its 50-day moving average, but fund managers were still said to be stock selective.

“U.S. non-farm payroll (jobs) data seems to be continuing in the right direction and the unemployment rate is coming down,” Veronika Pechlaner, an investment manager on the 100 million euro ($141.5 million) Ashburton European equity fund.

“But, we are still selective on consumer stocks as wage inflation is still not coming through.”

Financial stocks featured among the top performers after fund managers said the announcement by Dublin’s finance minister that it would be unwise to impose losses on senior bondholders at banks was being taken by the market as positive.

The Irish bank stress tests showed Ireland would need up to 24 billion euros more to recapitalize the financial system, which was in line with expectations.

“Everybody knew that the Irish banks needed additional capital … But the most important thing is that there won’t be any haircut on bonds,” a Paris-based analyst said.

Buyers came for Bank of Ireland (BKIR.I: Quote, Profile, Research) up 38.6 percent at 31 euro cents and Allied Irish (ALBK.I: Quote, Profile, Research) was 8.3 percent higher at 21 cents.

UK banks and insurers performed well on the back of the news, Barclays (BARC.L: Quote, Profile, Research) and Prudential (PRU.L: Quote, Profile, Research) gaining 4.3 percent and 3.4 percent respectively after falls on Thursday.

However, Irish Life & Permanent (IPM.I: Quote, Profile, Research) fell 58 percent after its banking arm is expected to face state control following plans to sell off its life business via an IPO.

Stock markets in the periphery euro zone countries gained. Ireland’s ISEQ (.ISEQ: Quote, Profile, Research) rose 2.3 percent, Spain’s IBEX 35 (.IBEX: Quote, Profile, Research) gained 1.5 percent, Portugal’s PSI 20 (.PSI20: Quote, Profile, Research) was up 1.4 percent and Italy’s benchmark (.FTMIB: Quote, Profile, Research) rose 1.1 percent.

In core Europe, Germany’s DAX (.GDAXI: Quote, Profile, Research) was 2 percent higher and France’s CAC 40 (.FCHI: Quote, Profile, Research) was up 1.6 percent.

SWISS RE GAINS

Insurer Swiss Re (RUKN.VX: Quote, Profile, Research) gained 3.6 percent on talk of a stake increase by U.S. investor Berkshire Hathaway (BRKa.N: Quote, Profile, Research), while stock exchanges themselves were also in the spotlight.

Deutsche Boerse (DB1Gn.DE: Quote, Profile, Research) fell 1.4 percent after Nasdaq OMX (NDAQ.O: Quote, Profile, Research) and IntercontinentalExchange (ICE.N: Quote, Profile, Research) unveiled a rival bid for NYSE Euronext (NYX.N: Quote, Profile, Research) which was 27 percent above the company’s valuation before the Frankfurt stock market operator made its agreed bid in February.

Looking at the overall market analysts said valuations were low and the corporate picture was improving and they remained bullish for the medium term.

“We are positive on the outlook for equities. We see that corporate earnings are well underpinned overall and that should be supportive,” said Anko Beldsnijder, managing director of MainFirst Asset Management, which manages 1 billion euros.

“We have added the metals and mining sector again to overweight because of attractive valuations.”

($1=.7065 Euro)

(Additional reporting by Blaise Robinson; Atul Prakash; Editing by Greg Mahlich)

U.S. jobs data boosts European shares