European stocks fell yesterday after the latest data showing weak US job creation dashed hopes for a strong economic recovery, dealers said.
London’s FTSE 100 index of leading shares closed down 0.59 per cent at 5,984.33 points, while in Paris the CAC 40 dropped one per cent to 3,865.58 points and in Frankfurt the DAX slid 0.48 per cent to 6,947.84 points.
Amsterdam dipped 0.13 per cent, Milan fell 0.46 per cent, Swiss stocks slid 0.54 per cent and Brussels ended down 0.77 per cent.
Stocks plunged 3.02 per cent in Lisbon after yields on Portuguese government bonds hit new record highs, just days before the country plans to try place long-term debt for the first time this year.
European markets slid lower in morning trading ahead of the release of the US jobs data and fell further afterwards.
The US Labour Department released its closely watched monthly unemployment report which investors had hoped would confirm recent data showing the US economic recovery was gaining speed.
But the data offered a mixed picture.
The unemployment rate fell sharply to 9.4 per cent in December from 9.8 per cent in November for its lowest level since May 2009 and better than the average estimate of 9.7 per cent.
But at the same time, the economy created 103,000 jobs, much fewer than the 150,000 forecast by analysts.
A report earlier in the week by the ADP firm showing a sharp rise in private sector hiring to nearly 300,000 in December had raised expectations that the US economic recovery might finally be starting to replace lost jobs.
“This is a cold(ish) shower after the excitement generated by ADP,” which reported earlier this week a stellar rise in private-sector hiring in December, said Ian Shepherdson of High Frequency Economics.
“The underlying trend is accelerating but progress is quite slow,” he said in a client note.
Federal Reserve chairman Ben Bernanke warned that the current rate of job creation was insufficient and meant a “considerable time” will be needed to right the jobs market.
“The economic recovery that began a year and a half ago is continuing,” the Fed boss said in prepared testimony to Congress, “although, to date, at a pace that has been insufficient to reduce the rate of unemployment significantly.”
“Considerable time likely will be required before the unemployment rate has returned to a more normal level.”
Wall Street opened flat and then slipped lower.
The Dow Jones Industrial Average was down 0.31 per cent to 11,661.40 points around 1700 GMT, while the S&P 500 index, a broader measure of the market, had dropped 0.37 per cent to 1,269.14 points.
The tech-rich Nasdaq was off 0.39 per cent to 2,699.29 points.
Asia’s New Year stocks rally showed signs of fading yesterday amid caution ahead of the US data, although Tokyo’s Nikkei hit an eight-month high on a firmer dollar, which gave a boost to auto stocks.
Tokyo’s Nikkei index edged up 0.11 per cent for its highest close since May 13, buoyed by car makers such as Toyota and Nissan, as a stronger dollar boosted US sales prospects.