Europe close: Equities advance despite disappointing data as US jobs report provides boost

European stocks ended the week on an upbeat note despite some disappointing German data, as a strong US job report meant the Federal Reserve is likely to hike interest rates next month.

The benchmark Stoxx Europe 600 index closed up 0.31%, while France’s CAC 40 climbed 0.08% and Germany’s DAX gained 0.92%.

As of 1636 GMT, the euro lost 1.27% and 0.30% against the dollar and the pound respectively and was flat against the yen, while Brent crude slid 1.03% to $47.49 a barrel.

NFP report boosts dollar

The dollar surged after the US Bureau of Labor Statistics said 271,000 jobs were added last month, shortening the odds for the US Federal Reserve to hike interest rates next month.

The increase was the biggest monthly gain of the year and was well ahead of analysts’ expectations for an 180,000 gain, while the unemployment rate fell to a seven-year low of 5% from 5.1% in the previous month.

“With Yellen stating that a December rate rise was a ‘live possibility’ and Dennis Lockhart this morning trumpeting the strength of the US economy, today’s figures were a succinct way to tell the markets to get ready for a likely end of year lift-off,” said Spreadex’s financial analyst Connor Campbell.

While US equities were on the back foot following the release of the NFP report, European indices moved firmly in positive territory and analysts expect the trend to continue, as the European Central Bank looks to implement fresh stimulus measures.

“Given the rising US dollar and the ECB’s push for more QE, it looks like Eurozone stocks may well continue to offer attractions for investors in the final quarter of the year,” said IG’s senior market analyst Chris Beauchamp.

The macroeconomic picture in the Eurozone was not as bright as figures released by Destatis showed German industrial output fell by 1.1% month-on-month on a seasonally-adjusted basis in September.

This marked the sharpest drop in over a year and fell well short of expectations for a 0.5% increase.

BHP tumbles after dam burst

In corporate news, German insurer Allianz slid 1.54% after reporting a bigger-than-expected 15% drop in third-quarter net profit.

BHP Billiton slumped 5.71% after a dam burst at an iron ore mine in Brazil part-owned by the company, leaving at least 15 people dead and almost 50 missing.

Compagnie Financiere Richemont tumbled 5.66 after the Cartier owner posted first-half profit and sales that fell short of analysts’ expectations, while French drug maker Sanofi plunged 6.84% after it warned that it may not see any profit growth for two years.

On the upside, Swiss agribusiness Syngenta gained 4.17% on reports it was in discussions over a combination with DuPont’s agricultural division.