European stocks, dollar drop before US jobs data

March 7, 2014
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, FRENCH TRADELONDON, March 7- Europe’s main stock markets fell and the dollar hit the lowest level against the euro for more than two years on Friday ahead of key US jobs data.

Markets were lower also at the end of a rollercoaster week for investors caused by the Ukraine crisis.

London’s benchmark FTSE 100 index slipped 0.18 percent to stand at 6,776.37 points around midday in the British capital.

Frankfurt’s DAX 30 dropped 0.71 percent to 9,475.12 points and in Paris the CAC 40 shed 0.29 percent to 4,404.07.

In foreign exchange deals, the euro jumped to $1.3915 from $1.3859 late in New York on Thursday, hitting the highest point since October 2011 in the process.

The dollar fell to 102.94 yen from 103.07 yen.

On the London Bullion Market, the price of gold gained to $1,348.07 an ounce from $1,345.25 on Thursday.

“The euro remains well underpinned… with the ECB decision yesterday to leave its monetary stance unchanged the key factor,” said Derek Halpenny, European head of global markets research at Bank of Tokyo-Mitsubishi UFJ.

The European Central Bank held its interest rates unchanged for the fourth month in a row on Thursday, assessing that the nascent recovery in the euro area remains on track.

As expected, the ECB left its central “refi” or refinancing rate unchanged at its current historical low of 0.25 percent at its monthly policy meeting.

Asian stock markets mostly rose on Friday after better-than-expected US data raised hopes for a strong payrolls report later in the day, traders said.

While the crisis in Ukraine is still to be resolved, investors are focused on economic fundamentals, with confidence boosted by upbeat comments on the eurozone from the ECB, while Wall Street saw another record close on Thursday.

“We’ve seen US investors continue to put their faith in the belief that the recent slow down in the US economy has been primarily due to the unseasonably cold weather the country has been experiencing since the end of last year,” said Michael Hewson, chief market analyst at traders CMC Markets UK.

“While there may be some truth in that belief, some of the weakness we’ve seen has pre-dated the start of the poor weather and its impact on the US economy.”

– Boost before Friday’s data –

In the United States, the Labor Department on Thursday said first-time claims for unemployment benefits fell last week to a three-month low of 323,000 from the prior week’s revised reading of 349,000. Analysts had expected the claims to fall to just 338,000.

It provided hope that Friday’s closely watched non-farm payrolls report for February will show a sharp improvement from the previous two months, which came in well below forecasts owing to a severe winter snap across most of the country.

“As always, everyone’s speculating as to the outcome,” said Jonathan Sudaria, dealer at Capital Spreads.

“If it’s a bad number… the markets will probably shrug it off and blame it on the weather again as has been evidence by the amount of pundits already making apologies for it.”

He added though that “fears of another flare up in the Ukraine and the associated carnage meted out last Monday may keep traders cautious going into the weekend”.

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