Investing.com - European stocks posted modest gains in Friday trade, following encouraging labor data out of the U.S. and hopes for avoidance of a new global economic recession.
At the end of Friday’s European session, the STOXX 50 Index climbed 0.91% to 2,269.19, France’s CAC 40 added 0.66% to 3,095.56, Britain’s FTSE 100 rose 0.23% to 5,303.40, and Germany’s DAX advanced 0.54% to close at 5,675.70.
On Friday, the U.S. Department of Labor announced that non-farm payrolls rose to a seasonally adjusted 103,000 in September, up from 57,000 the previous month. Market expectations were for non-farm payrolls to rise to 53,000 for the period.
Separately, the Labor Department reported that the U.S. unemployment rate remained unchanged in September at a seasonally adjusted 9.1%, in line with market expectations.
After the close of trading, Fitch Ratings cut Italy’s credit score to A-plus from AA-minus and Spain’s rating to AA-minus from AA-plus, citing “intensification of the euro area crisis and risks to the fiscal consolidation effort arising from the budgetary performance of some regions.”
“The still sizeable structural budget deficit, high level of net and external debt and the fragility of the economic recovery as the process of deleveraging and rebalancing continues, render Spain especially vulnerable to such an external shock.”
Meanwhile, German Chancellor Angela Merkel on Friday said European banks should attempt first to raise money in the private sector before turning to governments for protection against potential losses.
Merkel’s comments come a day after the European Central Bank announced plans to begin buying USD53 billion in covered bonds and institute longer term refinancing operations to commercials banks in the euro-zone beginning this month.
The ECB’s two-fold program was aimed at easing concerns in financial markets over Europe’s sovereign debt threats.
“First the banks have to try themselves to get capital. If that approach fails then...and only then , when a country can’t manage this on its own, may the EFSF (European Financial Stability Facility) be used, Merkel said in Berlin.
Automakers in German were among gainers in the Friday session, with BMW AG up 3.1%, and Volkswagen AG adding 2.06%.
Financial issues in the region proved laggards in light of uncertainty surrounding European debt, with Deutsche Bank AG slumping 3.8%, BNP Paribas SA losing 1.5% and Societe General SA down 0.8%.
Veolia Environnment SA dropped 1.7%, after the world’s leading water company was downgraded to sell from neutral by UBS AG.
Premier Foods Plc. nosedived 42%, as Britain’s largest food manufacturer announced third quarter sales “significantly below” company forecasts, lower by USD745 million.
Meanwhile in late afternoon trade on Wall Street shares reversed course after the Fitch’s downgrades. The Dow Jones Industrial Average was down 0.48% to 11,069.48, the Nasdaq Composite Index gave up 1.29% to 2,474.57 and the S&P 500 was lower by 1.12% at 1,151.94.