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European shares retreat ahead of U.S. jobs data

Published 01/07/2011, 04:41 AM
Updated 01/07/2011, 04:44 AM

* FTSEurofirst 300 falls 0.4 percent ahead of U.S. jobs data

* Miners among top decliners as base metals prices slip

By Atul Prakash

LONDON, Jan 7 (Reuters) - European share prices slipped back on Friday after scaling to 28-month highs in the previous session, with investors avoiding strong bets ahead of a key U.S. jobs report that is expected to set the market's near-term direction.

Forecast-beating U.S. private-sector jobs data on Wednesday raised hopes for the non-farm payrolls figures due out at 1330 GMT on Friday, although weekly jobless claims and chain store sales figures on Thursday did not meet analysts' expectations.

At 0919 GMT, the FTSEurofirst 300 index of top European shares was down 0.4 percent at 1,142.32 points after rising as high as 1,149.58 earlier in the session and climbing to its highest since mid-September 2008 on Thursday.

Miners lost ground, with the STOXX 600 European basic resources index falling 0.7 percent and Anglo American down 1.6 percent as base metal prices fell on a firmer dollar and talk of monetary tightening in top consumer China.

"What we are seeing is a limited amount of profit-taking, given the fact that these markets have moved very rapidly in a short space of time and are looking technically a little overbought," said Mike Lenhoff, chief strategist at Brewin Dolphin.

"I don't think the market is going to give up very much ground. They may just pause for breath but the underlying fundamental support does seem to be quite positive. Expectations for America have improved considerably and that has implications for earnings. Valuations for these markets are not demanding."

The U.S. ADP report this week showed a record number of private sector jobs were created in December, prompting analysts to upgrade their forecasts for non-farm payrolls to increase 175,000, up from 140,000 in an earlier Reuters survey.

"The consensus estimates suggest that U.S. non-farm payroll figures will show a rise of about 175,000, but the whisper figure is far higher than that. I think you have some room for disappointment," said Koen De Leus, strategist at KBC Securities, in Brussels.

"If it's a blow-out figure, then the positive momentum can go on for a while."

PHILIPS GAINS

Among individual movers, Philips Electronics rose 2.3 percent, touching an almost three-month high after JP Morgan upgraded the Dutch light bulb and consumer electronics maker to "overweight" from "neutral" on expected growth.

Swiss drugmaker Novartis AG rose 0.3 percent after it said the European Commission has approved broader application of its Lucentis drug to treat visually impaired patients, giving sales of the drug a potential boost.

On the macroeconomic front, Germany's trade balance narrowed in November as imports gained more than expected, a sign of domestic demand growing in strength although separate numbers on retail sales showed a surprise dip in the same month.

Across Europe, Britain's FTSE 100, Germany's DAX and France's CAC 40 fell 0.1 to 0.5 percent, while the Thomson Reuters Peripheral Eurozone Countries Index declined 0.6 percent. (Editing by Greg Mahlich)

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