European stocks and the euro lost ground yesterday as markets awaited key jobs data in the United States following its massive cash injection to support recovery in the world’s biggest economy.

Commodity markets were also in focus as crude oil prices hit two-year high points and gold struck a record peak close to $1,400 an ounce overnight.

In stock market trade approaching the mid-way point, London was down 0.25 per cent, Frankfurt dipped 0.05 per cent and Paris shed 0.29 per cent.

European stocks had rallied on Thursday, with Frankfurt and London hitting the highest levels for 2.5 years as the US Federal Reserve unveiled fresh stimulus measures.

Yesterday, the euro fell to $1.4170 from $1.4213 late on Thursday in New York.

The dollar fell to ¥80.67 from ¥80.74, as the Bank of Japan kept its key rate unchanged between zero and 0.1 per cent in a widely expected move, but did not announce fresh monetary easing measures.

“Having celebrated with gusto the Fed’s renewal of quantitative easing, the markets face a curious conundrum yesterday as the US delivers what promises to be the first increase in non-farm payrolls in four months,” said Ilya Spivak of analyst group at Daily FX.

“While one month of data is surely not enough to make any firm conclusions, it raises important questions nonetheless considering the persistently high unemployment rate was the centerpiece of the Fed’s argument for taking action.”

On Wednesday, the US central bank had announced that it would launch a $600 billion (€423 billion) asset-buying plan, or quantitative easing (QE), to bolster the nation’s sluggish economic recovery.

Under the arrangement, the central bank buys bonds from banks, thereby supplying them with cash for lending.

That was slightly higher than market expectations for about $500 billion of additional QE funds, while the Fed also maintained its ultra-low interest rates at zero to 0.25 per cent.

The announcement weighed on the dollar, causing investors to invest heavily in commodities.

In Europe, worries about weak economic recovery were reignited yesterday as the Bank of Spain said that the country’s economic recovery stalled in the third quarter as the result of government austerity measures.

The announcement sent Madrid’s main stock index sliding by more than two per cent.

US stock markets traded mixed yesterday a day after making stellar gains and as traders took in data showing the economy created many more jobs than expected last month.

The blue-chip Dow Jones Industrial Average shed 9.99 points (0.09 per cent) to 11,424.85 by 1400 GMT, a day after reaching a level it last held before the collapse of Lehman Brothers in September 2008 on the back of a new massive government stimulus plan.

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