By Sara Sjolin, MarketWatch
LONDON (MarketWatch) -- European stock markets climbed in
afternoon action on Friday, after U.S. nonfarm payrolls data beat
expectations, leaving investors questioning if the data would be
enough to trigger the Federal Reserve to scale back asset
purchases.
The Stoxx Europe 600 index gained 0.4% to 292.89, after closing
down 1.2% on Thursday.
The index had struggled for direction for most of the early
session, but was sent higher after U.S. nonfarm payrolls data
showed 175,000 jobs were added to the economy in May. The
unemployment rate, however, ticked higher to 7.6% from 7.5%.
Economists surveyed by MarketWatch expected an increase of 164,000
jobs in May and a jobless rate of 7.5%.
Ahead of the data, investors worried that a strong labor report
could push the Fed closer to scaling back its aggressive
asset-purchases program. Fed Chairman Ben Bernanke said last month
that a tapering could begin in coming months if data continue to
improve, fueling worries the $85-billion-a-month liquidity
injection into the market will soon come to an end.
"As the labor market often lags behind changes in output, the
case for scaling-back policy stimulus is by no means clear cut,"
said Chris Williamson, chief economist at Markit, said in a
note.
"The Fed is likely to watch the incoming data flow on business
activity and demand closely over the coming months before making
clear signals on policy changes, and will probably want to see the
actual rate of unemployment come down further before being
comfortable that a meaningful and sustainable recovery is in
place," he added.
U.S. stock futures pointed to a higher open on Wall Street.
Back in Europe, data showed industrial production in Germany
jumped 1.8% in April, well above the 0.2% expected by analysts
surveyed by FactSet.
Meanwhile, German trade data showed both exports and imports
grew strongly, raising hopes of more solid growth in the second
quarter.
The Bundesbank, however, cut its 2013 and 2014 growth forecast,
saying much will depend whether the euro zone emerges from
recession. The central bank lowered its GDP forecast for 2013 to
0.3% expansion from its December estimate of 0.4% and revised its
2014 outlook to 1.5% from 1.9%. Read: Buba cuts German growth
outlook -- but too soon?
The DAX 30 index added 0.5% to 8,139.85.
Shares of Deutsche Telekom AG climbed 1.3%, after the company
said its T-Systems unit won a contract to provide cloud services to
Finnish elevator company Kone Oyj
Insurance firms were also among notable gainers after Citigroup
lifted the financial-services sector to overweight from neutral.
Shares of Allianz SE added 1.6%, Swiss Re AG put on 2.6% and AXA SA
climbed 1.8%.
The U.K.'s FTSE 100 index gained 0.4% to 6,362.30.
Shares of Aberdeen Asset Management PLC slid 4.5%, after Bank of
America Merrill Lynch cut the investment firm to underperform from
neutral.
BT Group PLC added 3.4%, after Barclays lifted the telecom firm
to overweight from equal weight.
France's CAC 40 index traded 0.3% higher at 3,825.88.
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