Saturday, May 7, 2011

Europe Stocks Snap Losing Streak

Saturday, May 7, 2011

European markets snapped a three-session losing streak to end higher on Friday as gains in the banking sector and better-than-expected U.S. jobs data for April sparked a rally.

The Stoxx Europe 600 index closed up 1.3% at 281.33, paring losses for the week to 0.9%.

In the U.S., the jobs report sent a jolt of positive sentiment into the market. After a largely downtrodden week, stocks surged—on the one-year anniversary of the "flash crash," when the Dow Jones Industrial Average plunged about 600 points in 10 minutes.

Midday in New York, the Dow was up 156 points, or 1.2%, to 12740. The Nasdaq Composite added 1.4% to 2855 and the Standard & Poor's 500-stock index climbed 1.3% to 1352.

European markets got off to a sluggish start, weighed by losses for commodity-related stocks after crude-oil futures sustained their biggest one-day drop in two years on Thursday.

"We opened on the back of commodities and raw materials continuing their slide down. Europe markets have turned around partly because of banks, but also because sellers have stepped away," said Simon Brown, CEO of ProSpreads.

A further boost came courtesy of the U.S., where data showed the economy added 244,000 jobs in April, the biggest increase in almost a year.

Earlier in the day, there was encouraging economic news in Europe, as well, when German data showed March industrial production rose a better-than-expected 0.7%.

"At least, the outlook for household spending in Germany looks brighter than elsewhere in the region. Nonetheless, there are still few convincing signs that there will be a strong pickup in consumer spending," Ben May, European economist at Capital Economics, said in a note to investors.

Banks drove much of the gains for Europe, led by Royal Bank of Scotland Group, which rose 5.6% in London. The bank reported a first-quarter net loss that more than doubled, but impairments on bad loans dropped 27% from a year earlier.

In Frankfurt, Commerzbank rose 1.7%. "Given a stable market environment, we anticipate an operating profit in the 2011 financial year that is substantially higher than the 2010 figure," the bank said.

UBS gained 1.7% in Zurich, while UniCredit advanced 1.8% in Milan. French banks also climbed. Crédit Agricole gained 2.2% and BNP Paribas added 0.8%.

London's, the FTSE 100 index closed up 1% at 5976.77. Oil giant BP rallied 3.1%, with the company appearing closer to a solution for its stalled deal with Russia's Rosneft, following an arbitration panel decision.

International Consolidated Airlines Group rose 3.3% after it swung to a first-quarter net profit, as revenue rose 15%.

The German DAX 30 index rose 1.6% to 7492.25, led by an 8% rally in ThyssenKrupp. The steelmaker announced a divestment program with plans to spin off its stainless-steel group and sell automotive assets.

Deutsche Lufthansa rose 4.1% after UBS lifted its rating on the airline to "buy" from "neutral." UBS said it remained confident that underlying operating performance is on track. "A sustainable fall or stable oil price coupled with valuation should provide the upside catalyst," the broker said.

The French CAC 40 index added 1.3% to 4058.01.

Alcatel-Lucent fell 1.9%. The telecom-equipment maker's first-quarter net loss narrowed and beat expectations, though revenue fell slightly short of forecasts. The company's shares have rallied 93% this year.

Write to Barbara Kollmeyer at

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