European shares rise on US jobs data

European stocks rose yesterday, bolstered by a bigger-than-expected drop in new US unemployment claims and the prospect of a mega Glencore-Xstrata mining merger.

After treading water in the morning, European stocks turned up­wards after the US Labour Department reported that initial jobless claims, an indicator of the pace of layoffs, fell to 367,000 last week.

London’s FTSE 100 index of leading shares ended the day up 0.09 per cent to 5,796.07 points.

Meanwhile in Paris the CAC-40 index rose 0.27 per cent to 3,376.66 points and in Frankfurt the DAX 30 gained 0.59 per cent to 6,655.63 points, with both markets near six-month highs.

The euro was steady at $1.3160 compared with $1.3161 late in New York on Wednesday, as banks remained locked in negotiations with crisis-hit Greece over a potential debt write-off deal in Athens.

Wall Street opened higher on the initial jobless claims data that showed a continued trend towards a better US labour market.

“This report won’t have any direct bearing on the non-farm payrolls report tomorrow but it is apt to have some direct bearing on consumer confidence levels,” said Patrick O’Hare at Briefing.com.

Today the Labour Department reports January labour data, ex­pected to show the unemployment rate remained unchanged at 8.5 per cent amid a fragile recovery.

Approaching midday, the Dow Jones Industrial Average had turned down 0.13 per cent to 12,699.97 points, while the broader S&P 500 added 0.09 per cent to 1,325.22 points and the tech-heavy Nasdaq points gained 0.35 per cent to 2,858.35 points.

Asian equities rose as upbeat manufacturing data from across the globe lifted spirits, while traders were confident Greece would soon reach agreement with creditors.

Swiss-based mining companies Xstrata and Glencore unveiled a blockbuster merger yesterday that would create a commodities giant worth around $106.5 billion, sending their shares soaring. Xstrata surged 9.92 per cent to 1,230.5 pence, while Glencore jumped 6.94 per cent to 461.7 pence.

“Should the all-share merger of equals happen, it results in a game-changer for general commodity companies,” said Atif Latif, director of trading at Guardian Stockbrokers in London.

However other company news weighed on markets.

Energy giant Royal Dutch Shell said its 2011 net profit jumped by 54 per cent to $30.92 billion on the back of higher energy prices.

But the Anglo-Dutch group also revealed that net profits slipped four percent to $6.5 billion in the fourth quarter, due to lower industry refining margins and North American natural gas prices.

In response, Shell’s ‘B’ share price slid 1.63 per cent to 2,288.13 pence.