Job seekers waiting to speak to recruiters at a Rutgers University job fair in New Brunswick, New Jersey. Market optimism cooled after the US shed more jobs than expected in December. (Bloomberg Photo)

Stocks Fall After US Reports More Job Losses Than Expected

New York. Stocks and the dollar fell Friday after worse than expected US job losses in December stoked renewed concerns about the pace of the US economic recovery.

In Europe, the FTSE 100 index of leading British shares was down 24.06 points, or 0.4 percent, at 5,502.66 while Germany’s DAX fell 41.99 points, or 0.7 percent, to 5,977.37. The CAC-40 in France was 4.7 points, or 0.1 percent, lower at 4,020.10.

Wall Street opened down about 20 points, at 10,587.

European stocks and Wall Street futures had been trading higher until the monthly US jobs data from the Labor Department dented some of the optimism that was prevalent in the markets.

December figures showed that 85,000 jobs were lost, way more than the 10,000 or so predicted in the markets. That outweighed revisions to past months’ data showing that the US economy actually posted positive jobs growth of 4,000 in November instead of the initial estimate of 11,000 losses.

“A loss of 85,000 jobs in December was slightly disappointing relative to market expectations,’’ said Neil Mackinnon, global macro strategist at VTB Capital.

“However, the underlying picture is showing gradual signs of improvement in the US labor market and there are tentative signs that the US unemployment rate may have already peaked,’’ he added.

Despite the modest disappointment, the figures clearly show that the US economy is over the worst and that if current trends continue then sustained jobs creation may well be on the cards in the next few months.

Kit Juckes, chief economist at ECU Group, said the monthly jobs figures tend to be volatile and what really matters is the longer term trend. “The average Q1 figure should be positive and the unemployment rate should peak in Q2,’’ said Juckes.

The figures had been heavily hyped in the run-up to their release as a number of investors hoped they would provide clear evidence that the US economy was already generating net job creation at the end of 2009.

Stock markets around the world have rallied strongly since March’s lows — the Dow and the S&P 500, for example, surged more than 60 percent since then — as investors grew more optimistic about the global economic recovery after central banks and governments pushed through extraordinary policy measures to mitigate the deepest recession since World War II.

The dollar was sold off sharply in the wake of the jobs data, trading down a 1 percent on the day at 92.38 yen, while the euro pushed 0.6 percent higher to just above $1.44.

The dollar has rallied over the last month or so partly because of mounting optimism about the pace of the US economic recovery in the wake of November’s jobs data.

Earlier in Asia, Japanese shares led the way, with the Nikkei 225 stock average rising 116.66 points, or 1.1 percent, to 10,798.32.

South Korea’s Kospi added 0.7 percent to 1,695.26 as the Bank of Korea left its key interest rate at a record low after the government muscled in on the central bank’s policy meeting.

Australia’s market rose 0.3 percent, and Taiwan’s index was up 0.5 percent.

Chinese stocks recovered their early losses, with the Shanghai index closing up 0.1 percent at 3,196.00, and Hong Kong’s Hang Seng ticking up 0.1 percent to 22,296.75. Investors there were rattled Thursday after China’s central bank slightly raised the interest rate on its three-month bills, heightening concerns the government would restrain the liquidity that’s buoyed asset prices over the last year.

Oil prices fell, with benchmark crude for February delivery down 18 cents to $82.48 a barrel. On Thursday, the contract fell 52 cents to settle at $82.66.

The dollar was steady at 93.25 yen while the euro fell 0.1 percent at $1.43.



Associated Press

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