U.S. private companies added 217,000 jobs in February, well above the 180,000 analysts had predicted, reports payroll processor ADP

Cindy Allen

Cindy Allen

Mar 2, 2011 – Associated Press

LONDON , March 2, 2011 () – Upbeat U.S. jobs figures helped stock markets recover their poise Wednesday despite further oil price rises amid concerns that Libya's crisis will keep its crude production in disarray.

Stocks, which have been sliding for the past few days, particularly in Saudi Arabia, managed to stage something of a turnaround after payroll processor ADP said U.S. private companies added 217,000 jobs in February, well above the 180,000 analysts had predicted.

That's important because investors are beginning to zero in on Friday's monthly government jobs report for February, which often sets the stock market tone for a week or two after its release.

Analysts said the ADP numbers suggest that the Friday data may be stronger than currently expected. The consensus before the ADP survey was that U.S. employers added around 175,000 jobs.

"Heading into Friday's data, the ADP report will keep the growth bulls calling for a 250,000 payroll increase," said Steven Ricchiuto, chief economist at Mizuho Securities, who is a little bit less optimistic with his prediction of a 150,000 increase.

However, the ADP numbers provided investors with an incentive to start buying stocks again and European markets were far above their earlier day lows.

The FTSE 100 index of leading British shares closed down 0.4 percent at 5,914 while Germany's DAX fell 0.6 percent to 7,181. The CAC-40 in Paris ended 0.8 percent lower at 4,034.

In the U.S., the Dow Jones industrial average dipped 0.1 percent at 12,042 while the broader Standard & Poor's 500 was flat at 1,306.

Earlier in European and Asian trading, uncertainty over Libya dominated sentiment as the international community remains at odds about how forcefully to intervene and the regime of longtime leader Moammar Gadhafi clawed back some ground lost to the rebels.

Coupled with concerns that the uprisings, which have already brought down the leaders of Tunisia and Egypt, could spread to other oil-rich countries in the Middle East, oil prices rose further to near last week's highs.

By mid afternoon London time, a barrel of crude on the New York Mercantile Exchange was trading a dollar higher at $100.64 while the equivalent Brent rate in London rose 17 cents to $115.59. Both rates are now edging up to last week's levels, when the New York rate hit $102 a barrel and the Brent rate neared $120.

The growing view that this oil price spike is here to stay has heaped pressure on stocks. Over recent weeks, stocks have traded in opposite directions to energy prices. When they rise, investors get worried about the impact on the global economic recovery; when they fall they breathe a sigh of relief that the damage won't be too bad.

Events in the Middle East and North Africa will likely remain at the forefront of investors' thoughts, especially if Saudi Arabia, the world's biggest oil exporter, were to become embroiled in a similar uprising. Then many analysts think oil prices could rise to $200 a barrel, with damaging consequences for the economy. Not only would growth be hit but inflation would spike up sharply, too.

In the currency markets, investors are awaiting Thursday's monthly press conference from European Central Bank president Jean-Claude Trichet, which could have a bearing on market expectations for when the bank will start raising interest rates.

"Tomorrow's press conference by Trichet may prove to be the event of the week, with the market raising its expectations of an ECB rate hike," said Michael Woolfolk, a senior currency strategist at BNY Mellon.

By mid afternoon London time, the euro was up 0.8 percent on the day at $1.3873 while the dollar fell 0.2 percent to 81.67 yen.

Earlier in Asia, Japan's benchmark Nikkei 225 stock average slid 2.4 percent to 10,492.38 while South Korea's Kospi slipped 0.6 percent to 1,928.24. Hong Kong's Hang Seng index was down 1.5 percent to 23,048.66.

Chinese shares edged lower as investors cashed in on recent gains before the opening later this week of the annual session of the national legislature.

The benchmark Shanghai Composite Index lost 0.2 percent to 2,913.81, while the Shenzhen Composite Index for China's second, smaller exchange lost 0.5 percent to 1,292.99.

Pamela Sampson in Bangkok contributed to this report.

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