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Europe stocks halt sell-off; crude fall hits oils

Published 05/06/2011, 07:55 AM
Updated 05/06/2011, 08:00 AM
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* FTSEurofirst 300 up 0.1 percent

* Week-long drop in crude hits oil stocks

* Risk seen on the downside ahead of U.S. payrolls

* Mutual funds remain buyers of equities -Nomura

* For up-to-the-minute market news, click on

By Blaise Robinson

PARIS, May 6 (Reuters) - European stocks were slightly up around midday on Friday, halting a sharp three-session pullback, led by a rebound in shares of exporters, thanks to the euro's recent drop against the dollar.

A sharp drop in crude prices, however, dragged down shares of oil producers such as BP, down 0.8 percent, and Royal Dutch Shell, down 1.5 percent.

At 1130 GMT, the FTSEurofirst 300 index of top European shares was up 0.1 percent at 1,132.33 points, after losing 2.6 percent in the previous three sessions.

The index's rise on Friday was capped by strong resistance at around 1,133 points, which represents the index's 50-day moving average, while investors braced for key U.S. monthly jobs figures.

"Investors' appetite for equities isn't there. People have started to look beyond earnings, and the U.S. macro backdrop isn't quite rosy," said Harry Sebag, head of sales trading at Saxo Banque in Paris.

"Both the ADP and weekly jobless figures we've seen this week bode ill for today's payrolls, and a disappointing figure could confirm the current pull-back in stocks."

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Commodities performance overview:

http://r.reuters.com/nab49r

Commodity correlations with the dollar:

http://r.reuters.com/wex39r

Is the global economy slowing?

http://r.reuters.com/kej49r

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U.S. April non-farm payrolls, due at 1230 GMT, were forecast to rise 186,000, but a number of market players fear a weaker number, given recent worse-than-forecast weekly jobless claims and private payrolls data.

"We've moved to the sideline on European stocks in both cash and options. The earnings season didn't give us a clear direction, and there's a lack of visibility on the U.S. macro picture at the moment," said David Thebault, head of quantitative sales trading, at Paris-based Global Equities.

"The only thing I might play before the summer is buying volatility."

The Euro STOXX 50 volatility index, Europe's main investor fear gauge, was down 3.7 percent, at 21.74 points, following a week-long rally.

Around Europe, UK's FTSE 100 index was down 0.3 percent, Germany's DAX index up 0.5 percent, and France's CAC 40 up 0.3 percent.

Exporters such as EADS, Siemens and Zodiac Aerospace were up 0.6-2.6 percent, helped in part by Thursday's sharp retreat in the euro following a brisk rally.

Despite this week's fall in appetite for risky assets, mutual fund investors remained net buyers of global equities in the week of April 28 to May 4, Nomura said in a note.

It said global fund investors pumped in $8.5 billion for the week, compared with $8.1 billion in the previous week. (Additional reporting by Dominic Lau in London; Editing by Will Waterman)

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