European stock markets closed sharply higher yesterday after a stronger-than-expected US jobs report bolstered hopes for a strong recovery and justified the optimism behind recent price gains.
They said the US lead helped ease concerns over unrest in the Middle East, where rebel fighters offered a ceasefire in Libya, while Japan also appeared to be making some progress in stabilising the stricken Fukushima nuclear plant.
A pick-up in manufacturing activity in China in March after a fall in February added to the positive tone, suggesting Beijing’s tighter policy on inflation was not cutting across continued growth, they added.
In London, the FTSE 100 index of leading shares closed up 1.71 per cent at 6,009.92 points. In Paris, the CAC 40 jumped 1.64 per cent to 4,054.76 points and in Frankfurt the DAX gained 1.97 per cent at 7,179.81 points.
Other European markets posted similar substantial gains after a choppy week in which investors had kept a careful watch on events in the Middle East, Japan and Portugal which faced more problems in restoring its public finances.
Dealers said the markets also benefited from yesterday being the start of the second quarter, with new allocations boosting trade.
“The big driver at the moment appears to be resurgent hopes that the US economy is looking upbeat... momentum certainly seems to be building,” said IG Index trader Yusuf Heusen ahead of the US jobs report.
Stand-out gainers were the banks, especially in London, after Thursday’s announcement by Dublin of the latest measures and capital needed to stabilise its stricken banking system.
Lloyds Banking Group jumped five percent and Barclays added 4.29 per cent.
In New York, stocks rose strongly after US unemployment fell for the fourth straight month in March, to 8.8 per cent from 8.9 per cent in February, to hit the lowest level since March 2009.
The blue-chip Dow Jones Industrial Average was up 0.76 per cent at around 1605 GMT with the tech-heavy Nasdaq Composite rose 0.70 per cent.
The US economy created 216,000 jobs last month, up 11 per cent from February and the sixth consecutive month of gains after analysts had forecast 185,000.
“Overall, hugely encouraging, and more to come as the small-firm recovery gathers speed,” said Ian Shepherdson, chief US economist at High Frequency Economics.
“The March employment report was probably the best in four years,” said Harm Bandholz, chief US economist at UniCredit Research, adding: “We think that employment gains will accelerate further in the course of the year.”
In Asian trade earlier yesterday, markets were mixed as investors waited for the US data which they will react to on Monday.
Tokyo fell 0.48 per cent after gaining more than three per cent in the previous two sessions while Hong Kong jumped 1.17 per cent and Shanghai rose 1.34 per cent, helped by the Chinese manufacturing report. Sydney added 0.50 per cent.