MW: Europe stocks turn higher on drop in U.S. unemployment
By Steve Goldstein, MarketWatch
LONDON (MarketWatch) -- Europe stocks turned higher on Friday after a key report showed far fewer job losses in the U.S. during July than expected, feeding the bulls that have driven a major rally off March lows.
After early losses, the pan-European Dow Jones Stoxx 600 (ST:SXXP 228.79, +0.90, +0.40%) turned higher, rising 0.3% to 228.53 after the U.S. Labor Department said 247,000 jobs were lost in July and that the unemployment rate fell to 9.4%.
The gains put the index 47% above March lows of 155.38.
The German DAX (DX:DAX 5,427, +57.28, +1.07%) rose 1.1% to 5,430.78, the U.K. FTSE 100 (UK:UKX 4,701, +10.14, +0.22%) added 0.2% to 4,669.91 and the French CAC 40 (FR:PX1 3,499, +21.22, +0.61%) rose 0.8% to 3,503.03.
The gains came even after a leading bank's pessimistic forecast.
The Royal Bank of Scotland (UK:RBS 47.10, -6.35, -11.88%) (RBS 15.77, -2.52, -13.78%) dropped 12.1% after saying its first-half net loss widened to 1.04 billion pounds ($1.74 billion) from 827 million pounds a year earlier as impairment losses soared to 7.52 billion pounds from 1.48 billion pounds. See full story.
It said impairments are expected to remain at elevated levels -- unlike Lloyds Banking Group (UK:LLOY 100.00, -4.64, -4.43%) (LYG 6.80, -0.28, -3.96%) , which on Wednesday said they peaked in the first half.
Lloyds shares slumped 3.8%. See London Markets.
PSA Peugeot Citroen (FR:UG 21.00, -1.47, -6.54%) fell 6.1% as Standard & Poor's downgraded its credit rating to BB+ from BBB- with a negative outlook, saying low demand prospects will likely continue to weigh on profitability.
Umicore (BE:UMI 17.76, -1.52, -7.90%) dropped 7.1% as the Belgian specialty-materials firm said its first-half core profit dropped 77% on slumping demand for auto catalysts and metals processing.
France Telecom (FR:FTE 17.68, +0.58, +3.36%) (FT 4.99, 0.00, 0.00%) rose 3.2% as J.P. Morgan upgraded the company to overweight from equal-weight, saying consensus now reflects all the potential difficulties ahead and stressing that the second-quarter results showed that the cost reduction plans are beginning to bear fruit. The broker also told clients that the company's language on acquisitions has changed since the March investor day and that it now seems less likely to opt for a large deal in the near future.
