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European shares extend gains on US jobs hope
March 8, 2013 / 9:11 AM / in 5 years

European shares extend gains on US jobs hope

* FTSEurofirst up 0.5 percent

* Markets buoyed by U.S. data

* DAX hits highest since Jan. 2008

* Central bank support buffs up equities

* France Telecom lifted by Exane upgrade

By David Brett

LONDON, March 8 (Reuters) - European shares rose early on Friday with investors anticipating a stronger U.S. jobs figure reading, while unprecedented central bank monetary policy support kept equities around multi-year highs.

By 0846 GMT, the FTSEurofirst300 was up 5.71 points, or 0.5 percent, at 1190.88, holding near highs last seen just over two years ago as central banks’ accomodative monetary policy continues to keep asset prices supported.

Germany’s DAX briefly broke the 8,000 level for the first time sine Jan. 2008, intraday on Friday while the rise in global prices saw MSCI’s world share index hit its highest level since June, 2008 during the morning.

“Markets are breaking higher. At this time it is pointless to fight the strong uptrend. With so much support from central banks it’s hard to see where the downside will come from,” Jawaid Afsar, sales trader at SecurEquity, said.

A strengthening U.S. economy is also having a positive effect on equities after more strong labour market data on Thursday helped push the Dow to fresh all-time highs.

That has set the bar high for the non-farm payrolls later in the session, with economists expecting U.S. employers to have added 160,000 jobs last month, up slightly from January’s 157,000 count, although traders said investors might be positioning themselves for a better reading after recent data.

“People are pushing estimates a little higher after the initial claims data (on Thursday), so I think any from 160,000 to 180,000 would be priced in already. You might need to see a number above 200,000 to get a real upside surprise,” Gerry Celaya, chief strategist at Red Tower, said.

In risk-on mode, investors tucked into financials -- which generally benefit when stock market rise due to the inflationary impact it has on the assets they hold -- with banks and insurers 1.2 and 0.7 percent higher, respectively.

Investment manager Schroders was the top individual performer among the financials as a bevvy of investment banks began raising forecasts and target prices after the firm’s results on Thursday.

“Assets under management, flows, profits and dividend (were all) better than expected,” JP Morgan said.

A host of upgrades following results on Thursday also helped Satellite communications provider Inmarsat rise 3.1 percent, as brokers and investment banks concentrated on the companies future rather than its troubled recent past.

Gains in Inmarsat contributed to a 0.7 percent gain in the telecom sector, which was led higher by a 3.5 percent gain in France Telecom.

France Telecom was upgraded by to “outperform” from “neutral” by Exane BNP Paribas, which said: “After years of sharply falling EBITDA in France, we believe an inflection point is approaching thanks to accelerating cost-cutting and better fixed-line trends.”

Basic resource stocks, however, lagged broader gains as China reported a 15.2 percent fall in imports and Credit Suisse cut its recommendation on the sector to “underweight”.

“Investment growth and PMI new orders have dipped. Growth has become even more unbalanced and reliant on borrowing. The risk of policy tightening is growing, with inflationary indicators at two-year highs,” Credit Suisse said, referring to China, in a note.

Chris Pizzey, London MPG Desk, +44 0207 542-4441

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