European stocks drop on U.S. unemployment rate

PARIS/LONDON, June 6 (Reuters) - European stocksdropped on Friday after data showed the U.S. unemployment rate rose to its highest level in more than 3-1/2 years.

At 1240 GMT, the FTSEurofirst 300 .FTEU3 index of top European shares was down 0.7 percent at 1,300.56 points. The index had traded flat just before the data was announced. Data showed the unemployment rate rose to 5.5 percent last month from 5 percent, and U.S. employers shed jobs for a fifth consecutive month in May, cutting some 49,000 jobs, up from a revised 28,000 that were lost in April.

"All in all, we usually look at the big non-farm payroll figure but this time it seems to be the actual unemployment rate which has risen quite dramatically," said Angus Campbell, head of sales at Capital Spreads. "It's not looking great when the last few weeks we've had glimmers of hope for the market place."

"A lot of people were saying a recession has actually just about been avoided but it's like the Titanic -- they thought they'd got away with it at first when they just shaved the iceberg but slowly and surely the ship did have irreparable damage and everything went under," he said. (Reporting by Blaise Robinson and Michael Taylor)