LONDON (AFP) – Disappointing US jobs data gave European stock markets a chill Friday as the lacklustre hiring threw up questions about the health of the US economy and the timing of a US interest rate hike.
Major European stock indices had been trading with gains of over 1.5 percent in early afternoon trade, but pulled back sharply after data showed the US economy added far fewer jobs than expected in September and hiring was weaker in the prior two months.
The US economy added just 142,000 jobs last month, far short of estimates of around 205,000 jobs. The Labor Department also trimmed its estimates for jobs growth in July and August.
Analysts lowered the odds the US Federal Reserve will imminently raise interest rates.
“These data help the case for the Fed to stay on hold in October,” said Jim O Sullivan, chief US economist at High Frequency Economics.
London s FTSE 100 index dipped 0.02 percent to 6,071 points, while in the eurozone, Frankfurt s DAX 30 fell 0.76 percent to 9,436.96 and the Paris CAC 40 shed 0.57 percent to 4,401.47.
In foreign exchange deals, the European single currency rose to $1.1296, up from $1.1187 late in New York on Thursday, shooting up as the prospect of an early rate hike had been propping up the US dollar.
Wall Street stocks opened sharply lower.
The Dow Jones Industrial Average fell 1.48 percent to 16,031.73 points in the first five minutes of trading.
The broad-based S&P 500 fell 1.49 percent to 1,895.25, while the tech-rich Nasdaq Composite Index dropped 1.50 percent to 4,557.77.
“Today s employment report has most likely removed even the last small chance for a rate hike as early as this month,” said Harm Bandholz, chief US economist at UniCredit Research.
The US Federal Reserve s monetary policy committee next meets on October 28.
“But we continue to expect the first move at the mid-December meeting,” he said.
- UK banks boosted -
In London, banking sector stocks shot up after the Financial Conduct Authority regulator unveiled plans to impose a two-year deadline on claims for mis-sold credit insurance.
British banks have so far paid out about 25 billion ($38 billion, 34 billion euros) to customers who were mis-sold payment protection insurance (PPI).
Lloyds Banking Group shares surged 1.42 percent to 76.29 pence and Royal Bank of Scotland added 0.16 percent to 319.70 pence.
Other British banks saw their share prices pulled down after the US jobs data was released.
Barclays slid 0.40 percent to 246.15 pence and HSBC dipped 0.19 percent to 502.10 pence.
“The financial sector has led the gains on the FTSE 100, with banks and insurers bolstered by a proposal by the FCA to put an end date on PPI claims,” noted CMC Markets analyst Jasper Lawler.
PPI provided insurance for consumers should they fail to meet repayments on a credit product such as consumer loans, mortgages or payment cards
However, the insurance was mis-sold to millions of people who either had no idea what they were buying or had little chance of making a successful claim.
Meanwhile, credit-checking company Experian plunged 5.21 percent to 1,019 pence, after admitting that 15 million US customers had their personal data hacked.
The affected customers are clients of T-Mobile USA — the American unit of the German mobile phone giant.
The hacked data included names, dates of birth, addresses, social security numbers and other forms of identification like drivers license numbers, as well as additional information. No payment card or banking information was acquired.
An Experian spokesman stressed that it was an “isolated incident”, adding that the group s consumer credit data base was not accessed.