Signs of firm US recovery trigger market gains

(AP) Signs of firm US recovery trigger market gains
Associated Press
Evidence that the U.S. economic recovery is firmly on track drove markets higher on Friday, adding to the cheer from good economic indicators out of Europe.

The world’s largest economy added 157,000 jobs in January, in line with market expectations, though hiring over the past two years was revised up. The improvement was not sufficient to prevent the unemployment rate _ which is based on surveys of households, not employers _ from edging up to 7.9 percent from 7.8 percent in December.

But the figure eased concerns that the U.S. economic recovery may have been running out of steam. Official data this week showed the economy contracted on an annualized basis in the fourth quarter for the first time in three years, though mainly due to a one-off fall in defense spending.

Other indicators released Friday proved similarly upbeat _ a measure of manufacturing activity in the U.S. rose strongly in January while construction spending grew in December.

By midafternoon in Europe, Germany’s DAX was up 0.8 percent to 7,837.28 while France’s CAC-40 added 1.3 percent to 3,781.43. Britain’s FTSE 100 rose 0.9 percent to 6,333.81.

Wall Street rallied on the open, with the Dow rising 1 percent to 13,994.05, trading momentarily above 14,000 for the first time since October 2007. The broader S&P 500 added 0.8 percent to 1,510.53.

Although the Dow Jones industrial average finished lower on Thursday, the index logged its best January since 1994 by finishing 5.8 percent higher for the month. The Standard & Poor’s 500 finished the month 5 percent higher, its best start to the year since 1997.

Earlier, upbeat news in Europe had helped push markets higher. Official figures showed the unemployment rate in the 17-country eurozone was at a lower-than-expected 11.7 percent in December, unchanged from the previous month’s rate, which was revised down from 11.8 percent, a record high. Inflation was also steady, suggesting the recession ravaging the currency union is it abating.

“With eurozone economic activity seemingly bottoming out last October and business confidence picking up, the pressure on labor markets has eased,” said Howard Archer, chief European economist at HIS Global Insight.

“Nevertheless, business confidence is still relatively low in most countries and eurozone economic activity is unlikely to be strong enough to prevent further rises in unemployment over the coming months.”

Earlier in Asia, stocks were mixed after manufacturing data from China fell short of expectations. Industrial production is still growing, but at a slower pace, according to the government-sanctioned China Federation of Logistics and Purchasing. Its manufacturing index for January fell to 50.4 from 50.6 in December on a 100-point scale in which numbers above 50 indicate expansion.

Hong Kong’s Hang Seng fell marginally to 23,721.84. South Korea’s Kospi dropped 0.2 percent to 1,957.79. Australia’s S&P/ASX 200 gained 0.9 percent to 4,921.10. The ASX closed at 4,879 on Thursday, capping its best January since 1995, Lucas said.

Japan’s Nikkei 225, meanwhile, was once again energized by the yen’s continued descent against the dollar. The index rose 0.5 percent to 11,191.34.

Benchmark oil for March delivery was down 12 cents to $97.37 per barrel in electronic trading on the New York Mercantile Exchange. The contract fell 45 cents to close at $97.49 a barrel on the Nymex on Thursday.

In currencies, euro rose to $1.3645 from $1.3574 late Thursday in New York. The dollar rose to 92.39 yen from 91.38 yen.


Pamela Sampson in Bangkok contributed to this report.