European shares closed higher yesterday for the third consecutive session, with commodity stocks rising on the back of firmer crude and metal prices, while M&A activity boosted telecoms.
The pan-European FTSEurofirst 300 index of top shares closed up 0.2 per cent at 977.75 points in a choppy session after being up as much as 982.63 points earlier and down as low as 974.13 points.
The FTSEurofirst 300 index of top European shares has rallied 51 percent since hitting a low in early March but it is still down 16 per cent from its level in mid-Sept 2008 before the collapse of Lehman Brothers.
The index initially slipped after the Conference Board, a private research group, said its US Employment Trends Index inched lower to 88.1 last month from a revised 88.2 in July, originally reported at 88.3 and pointed to flat employment market for the rest of the year.
Across Europe, the FTSE 100 index rose 0.3 per cent, Germany's DAX was up 0.3 per cent and France's CAC 40 was 0.2 per cent higher.
"The US jobs data is significant as those who are unemployed are unlikely to find employment and have no money to spend and those that do have a job will be sitting on their money and saving," said David Buik, partner at BGC Partners.
"This is significant for the market as retail spending is 70 per cent of GDP. This could be devastating," he said.
In Europe miners added the most points to the index supported by higher metal prices. Gold powered through the $1,000 per ounce psychological barrier, carried by a wave of pent-up technical momentum and dollar weakness, with some analysts eyeing last year's record high of $1,030.80.
Anglo American, Antofagasta, BHP Billiton, Eurasian Natural Resources Corporation, Rio Tinto and Xstrata were up 1.5 to 3.6 per cent.
Energy stocks were higher as the price of crude oil rose five per cent. BG Group, BP, Royal Dutch Shell and Total were up 0.6 to 3.5 per cent. Telecoms stocks were also gainers. Deutsche Telekom rose 1.9 per cent and France Telecom rose 1.8 per cent after the two companies launched exclusive talks to merge their British mobile units in a joint venture that would grab the top spot in the cut-throat UK market. "With M&A back on the agenda, the markets have found a new impetus," said John Murphy, analyst at ODL Securities.
"Whilst the markets have traded higher over the past few months, the truest sign that the credit markets are unfreezing will be the re-emergence of corporate activity," he added.
Vodafone gained 1.7 per cent, with traders citing relief that the firm is not involved in the T-Mobile merger talks.
Turning to economic news, ECB Governing Council member Axel Weber said that, although it was currently too early for the ECB to unwind its support for the economy, the central bank would act decisively against dangers to price stability.