European stocks ended higher yesterday, adding to the previous session's rally, after data showed US employers shed fewer jobs last month than in October, lifting sentiment ahead of Friday's key jobs data.
The FTSEurofirst 300 index of top European shares closed 0.5 per cent higher at 1,015.77 points. The index, which fell sharply last week on concerns over Dubai's debt woes, jumped back on Tuesday, gaining 2.6 per cent as the worries receded.
"Fears over Dubai's debt proved groundless. It turned out to be a good opportunity to book recent gains, before the market rises again," said Marc Touati, general manager and head of research at Global Equities, in Paris.
"We're done with negative surprises. This rally is built on sound macro foundations, and even though the jobs market will take time to recover, at least the pace of jobs destruction is slowing down."
US private companies shed 169,000 jobs last month, fewer than the 195,000 jobs lost in October, suggesting some stabilisation in the labour market, according to the ADP Employer Services report.
The ADP data is seen as a proxy for the US government's closely-watched report on nonfarm payrolls, due on Friday.
Analysts polled recently by Reuters projected US payrolls likely shrank by 130,000 in November, compared with a 190,000 decline in October.
Mining shares were among the top gainers yesterday, on burgeon-ing metal prices such as gold, which rose to record highs well above $1,200 an ounce, propelled by heavy buying by hedge funds and other gold investment products.
Rio Tinto added 2.6 per cent, BHP Billiton gained one per cent, and Xstrata rose 1.1 per cent.
But gains on the market were limited by retreating banking shares, with BNP Paribas down 1.3 per cent and Deutsche Bank down 1.4 per cent, while ING dropped three per cent as shareholders sold some of their rights in the Dutch bank and insurer, traders said.
The DJ STOXX banking index has dropped seven per cent since reaching a peak in mid-October while the broader DJ STOXX 600 has lost about 1.5 per cent over the same period. Defensive sectors such as telecoms, pharmas and utilities have outperfomed.
Around Europe, UK's FTSE 100 index gained 0.3 per cent, Germany's DAX index rose 0.1 per cent, and France's CAC 40 added 0.5 per cent.
LVMH gained 2.9 per cent, rising along with other retail shares and after RBS upgraded its rating on the stock to "hold" from "sell", describing the luxury goods firm as a "safer haven in still rough waters".