European shares close flat ahead of US jobs data

Published 10/07/2010, 01:41 PM
Updated 10/07/2010, 01:44 PM

* FTSEurofirst 300 closes flat after 2 days of gains

* U.S. jobs data due Friday, 1230 GMT

* Miners down, tracking metal prices as dollar recovers

* ECB, BoE keep interest rates on hold, as expected

By Harro ten Wolde

LONDON, Oct 7 (Reuters) - European share prices ended flat on Thursday, with a sharp decline in mining stocks on the back of weaker metals prices offset by stronger automakers, led by a surge in Renault after it sold a large part of its stake in truckmaker Volvo.

The pan-European FTSEurofirst 300 index of top shares was almost unchanged at 1,070.53 points after closing higher in the previous two sessions.

Investors awaited key U.S. non-farm payroll numbers due on Friday. Before that the U.S. third-quarter corporate earnings season gets underway with figures due later on Thursday from aluminium giant Alcoa.

"We are below resistances and are trying to overcome it ... we are waiting for a new signal, a good one," said Achim Matzke, analyst at Commerzbank in Frankfurt. "I am not sure whether it will be tomorrow, but chances are increasing."

Miners came under pressure as metals prices fell after the dollar recovered, with investors betting the rally earlier in the day was too far, too fast. BHP Billiton, Anglo American, Antofagasta, Rio Tinto, Xstrata and ENRC fell 1.4 to 4.9 percent.

Across Europe, Britain's FTSE 100 fell 0.3 percent, Germany's DAX rose 0.1 percent, while France's CAC 40 gained 0.2 percent.

U.S. UNEMPLOYMENT CLAIMS FALL

European shares gained during the day after data showed new U.S. claims for unemployment benefits unexpectedly fell to their lowest level in nearly three months, but the market gave up most of the gains later in the session.

Equities have been boosted in recent days on speculation that the U.S. Federal Reserve could embark on a new round of quantitative easing after the Bank of Japan unexpectedly cut rates close to zero on Tuesday and said it would pour money into the markets through asset purchases.

Michael Hewson, analyst at CMC Markets, said none of the recent U.S. data had changed the market's conviction that the U.S. will announce another stimulus programme at the Federal Reserve's November rate-setting meeting.

"Tomorrow's U.S. payroll numbers could go some way to deciding how likely that is in the view of the market," he said.

European equities showed little reaction on Thursday after the European Central Bank kept its key interest rate on hold at 1.0 percent, as expected. The Bank of England also left its rate at 0.5 percent for a 20th consecutive month and kept its quantitative easing asset-buying programme on hold.

Carmakers were higher, led by a 8.5-percent gain in Renault after the French carmaker said it had sold a chunk of its 21.7 percent stake in Swedish truck maker Volvo cutting it to 6.8 percent, to help reduce debt.

Within the sector, Daimler, Volkswagen and Peugeot added 1.3 to 2.6 percent, while Volvo shed 5.3 percent.

Man Group surged 5.1 percent, with a number of traders citing talk of bid interest and some pointing to Bank of New York Mellon as being the potential suitor. Man Group and Bank of New York both declined to comment.

Marks & Spencer rose 4.9 percent on better-than-expected sales growth.

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