European exchanges rise on US job figures

European stock exchanges closed with solid gains yesterday on news that the US private sector shed fewer jobs in April than expected, boosting hopes the recession could be nearing an end, and on positive corporate results.

But the jobs report failed to have a significant impact on Wall Street, where investors were cautious ahead of the release Thursday of the results of "stress tests" by the government on key US banks.

The London FTSE 100 index added 1.37 per cent to close at 4,396.49 points while in Paris the CAC 40 rose 1.81 per cent to finish at 3,283.51. In Frankfurt the Dax gained 0.57 per cent to finish at 4,880.71.

Elsewhere there were gains of 1.01 per cent in Madrid, 0.73 per cent on the Swiss Market Index and 1.24 per cent in Amsterdam.

Investors in Europe were cheered by a survey from private payrolls firm ADP showing that the US private sector shed 491,000 jobs in April, fewer than expected by analysts, which offered further support for the notion that the recession is easing.

"This news is encouraging for the market since it fits the bottoming-out thesis," said Patrick O'Hare at Briefing.com.

"However, it isn't much cause for economic celebration that 'only' 491,000 positions were lost in the private sector in April."

A Paris trader described the report "as a good surprise," noting that a loss of 645,000 private sector jobs had been feared.

But on Wall Street the focus was on the future of the fragile US banking sector and investors were cautious.

The Dow Jones Industrial Average was up 0.12 per cent at 8,421.16 at midday while the Nasdaq composite had fallen 0.61 percent to 1,743.37.

The market was jittery following reports that Bank of America might need to raise as much as $34 billion in capital to meet the requirements of the US government stress tests.

The jobs report "helped markets reverse course and jump into positive territory as the economic 'green shoots' argument is gaining ground," said analysts at Charles Schwab & Co.

"However, traders are treading with some caution" ahead of Thursday's (today's) release of the results of the government's stress tests.

The tests are designed to determine how much additional capital key US banks might need to meet future lending requirements in a sluggish economy.

In London, sentiment was growing that a recovery from the global finance crisis was at hand, with banks leading the way.

HSBC rose 4.15 per cent and Standard Chartered 9.22 per cent.

In Paris, Societe Generale rose 3.26 per cent on news that chief executive Federic Oudea would replace Daniel Bouton as chairman at a bank rocked by a massive and costly trading scandal last year.

Elsewhere in the sector, BNP Paribas jumped 7.28 per cent after reporting a 21 per cent slide in first quarter net earnings that nonetheless beat market expectations.

In Frankfurt, auto maker BMW said it made a loss early this year but the performance was likewise less negative than had been foreseen and its shares rose 2.56 per cent.