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Jun 3, 2016

European Markets at Close Report, by CNBC on June 3, 2016: Europe Sinks at Close After U.S. Jobs Miss Jolts Markets

Alexandra Gibbs, Antonia Matthews
European stocks dropped sharply by Friday's close after investors learned that the U.S. had only added 38,000 jobs in May, well below Wall Street expectations of 162,000.

The pan-European STOXX 600 came off session lows, but ended down 0.9 percent provisionally. The index—which was higher in earlier trade—fell following the U.S. jobs data. On the week, the STOXX 600 finished down 2.5 percent provisionally.
The FTSE held onto gains closing up 0.3 percent, while the French CAC 40 and Germany's DAX tumbled, both ending over 1 percent down.

All eyes on US jobs


FTSE FTSE 6206.90
21.29 0.34% 505075753
DAX DAX 10097.96
-110.04 -1.08% 69276895
CAC CAC 4420.34
-45.66 -1.02% 93758109
IBEX 35 IBEX 35 Idx 8798.50
-159.40 -1.78% 213306288
One key point of interest for global investors on Friday has been the latest jobs report out for the U.S. Wall Street was initially expecting to see a figure of 162,000 jobs in May and the unemployment rate hold steady at 5.0 percent. However the nonfarm payroll number sent markets spinning after the figure came in at just 38,000 jobs. The headline unemployment fell to 4.7 percent.
Both the euro and sterling rose sharply against the dollar, after the report. The disappointing data has cast doubts on whether the Federal Reserve will raise rates in June or July.
"The US Non-Farm payroll data was crazy and completely unbelievable and this is the last set of important data before the Fed meeting. When you look at the data set, it really boggles your mind because the unemployment rate has ticked lower. The productivity picture is even more confusing as it is not increasing," Naeem Aslam, chief market analyst at Think Forex UK, said in a note.
Elsewhere, European stocks have been digesting the latest news from the European Central Bank, who chose to leave rates on hold on Thursday as expected, while slightly upping its growth forecast for 2016. On the data front, the latest European services PMIs came out, with Markit's composite PMI output for the euro zone coming in at 53.1, up from April's 53.0, indicating economic growth for the region remained subdued.
In the oil space, both Brent and U.S. WTI came under pressure on Friday, slipping below $50 and $49 a barrel respectively. Prices were reacting to the U.S. jobs report, along with news from OPEC which saw its members fail to agree on output targets; however analysts did see some positives, as Saudi Arabia pledged not to flood the market with more fuel.
Oil and gas stocks almost all of its gains on Friday, however BP up almost 2 percent after the oil major agreed late on Thursday, to pay $175 million to shareholders over Gulf spill claims.
Overseas, Asia closed mostly higher, with the Nikkei closing higher, despite a stronger yen. U.S. markets traded lower in early trade, after the May jobs report renewed concerns over economic growth.

RWE, Accor shares soar

Aside from the nonfarm payroll data, Europe's basic resources outperformed as the sector was lifted by a solid rise in metal prices and the U.S. jobs data. Shares of Glencore, BHP Billiton and Anglo American were all trading above 3 percent. Fresnillo and Randgold Resources became top performers, both up above 7 percent, as precious metal prices rallied on the back of the jobs report.
Germany's RWE helped lift the utility sector, up over 4.5 percent, after Bank of America Merrill Lynch upgraded its stock from "neutral" to "buy", according to Reuters who cited traders.
Meanwhile in France, Accor popped over 4.5 percent. The French hotel group was in focus after a French media report said that China's Jin Jiang was planning to raise its stake in the firm. Accor declined to comment on the rumor.
Near the bottom of Europe's benchmarks was Airbus which fell more than 3 percent. This comes after the CEO at Qatar Airways said it had cancelled its first Airbus A320neo jet and could walk away from more, due to delays in deliveries caused by engine problems, Reuters reported.
Freenet was one of the STOXX 600's top performers, up 4 percent after Warburg Research increased its rating on the stock to "buy"; while Bilfinger sank to the bottom of the benchmarks, off 9.5 percent. Many European banks were posting solid losses, in light of the U.S. jobs data.