EUROPE MARKETS: European Stocks Close With Best Daily Gain In 3 Weeks After U.S. Jobs Report

By Carla Mozee, MarketWatch Features Dow Jones Newswires

Swiss Re shares pushed lower after results; euro falls below $1.18

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European stocks rallied on Friday as a jump in bank shares helped the regional benchmark overcome losses in shares of Swiss Re AG and British home builders.

The Stoxx Europe 600 index leaped 1% to end at 382.53, the biggest percentage rise since July 14, FactSet data showed. The benchmark finished at its highest level since July 26, with all sectors ending higher, led by consumer goods, industrial and telecom shares.

The surge guided the Stoxx 600 to a weekly rise of 1.1%, marking its first win in three weeks.

"European and U.S. markets are pushing higher after an overwhelmingly positive U.S. jobs report, despite the fact that this greatly increased the likeliness of a third and final interest rate hike by the Federal Reserve in 2017," said IG market analyst Joshua Mahony in a note.

The U.S. Labor Department said the U.S. economy added 209,000 jobs in July (http://www.marketwatch.com/story/us-gains-209000-jobs-in-july-unemployment-retouches-16-year-low-of-43-2017-08-04), while wage growth met expectations with a 0.3% rate. The euro and the British pound, which had been gaining against the greenback this week, dropped after the report.

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"While the stronger pound and euro have proved detrimental for the U.K. and eurozone markets of late, it is clear that the U.S. markets are less focused on a short-term dollar rally, instead focusing on the improving economic picture," he said.

A weakening euro and pound can help revenue made overseas by European and U.K. companies, and, in turn, boost their share prices.

The euro was yanked down to $1.1758 after the jobs report, from $1.1870 late Thursday in New York. The pound slid to $1.3041 from $1.3138 in the previous session.

Investors largely don't expect either the European Central Bank or the Bank of England to raise interest rates this year.

See:Dovish or hawkish? BOE leaves traders confused after 'Super Thursday' (http://www.marketwatch.com/story/dovish-or-hawkish-bank-of-england-leaves-traders-confused-after-super-thursday-2017-08-03)

Bank stocks: But European bank shares climbed on the prospect of a rate hike by the Fed, in part as many European lenders have U.S. operations and higher rates can improve net interest income.

The Stoxx Europe 600 Bank Index bulked up 1.2% on Friday. Shares of Deutsche Bank AG (DBK.XE) (DBK.XE) ended 2.4% higher, Banco Santander SA (SAN) picked up 1% and Credit Agricole SA (ACA.FR) moved up 1.1%.

Other stock movers: Stock in Swiss Re AG (SSREY) fell 3.1%. The Zurich-based reinsurance company said its first-half net earnings fell to $1.21 billion from $1.87 billion in the year ago period. Profit took a $360 million hit from claims in the wake of Cyclone Debbie, which ran through the Australian region in late March.

Royal Bank of Scotland Group PLC (RBS.LN) (RBS.LN) climbed 2% after the lender posted its first half-year profit in three years (http://www.marketwatch.com/story/rbs-swings-to-profit-as-one-off-effect-fades-2017-08-04), despite a $5.5 billion U.S. settlement.

Near the bottom of the Stoxx 600, British home builder Persimmon PLC (PSN.LN) skidded 4% lower, while peers Barratt Developments PLC (BDEV.LN) and Taylor Wimpey PLC (TW.LN) slumped 4.7% and 3.7%, respectively.

Those moves came after real-estate publication Property Week said the U.K. government has initiated a review of the Help to Buy housing scheme (http://www.propertyweek.com/news/help-to-buy-could-end-early-under-government-review/5090767.article), and the program, which provides financial aid to first-time home buyers, could be wound down or replaced before its planned end in April 2021.

National indexes: France's CAC 40 index ended up 1.4% at 5,203.44, while Germany's DAX 30 climbed 1.2% to 12,297.72.

The U.K.'s FTSE 100 closed up 0.5% at 7,511.71, a six-week high (http://www.marketwatch.com/story/rbs-shares-propel-uk-stocks-higher-after-earnings-2017-08-04). Spain's IBEX 35 ended up 1% at 10,548.40.

Data: German manufacturing orders rose 1% in June (http://www.marketwatch.com/story/german-manufacturing-orders-rise-on-home-demand-2017-08-04) from the previous month, driven by a surge in domestic demand, according to the country's economics ministry.

(END) Dow Jones Newswires

August 04, 2017 13:29 ET (17:29 GMT)