(Recasts with U.S. markets; changes dateline; previous
LONDON)
By Herbert Lash
NEW YORK, May 2 (Reuters) - Oil jumped more than 3 percent
to over $115 a barrel and U.S. and European stocks rose on
Friday as U.S. jobs data suggested an economic slowdown in the
United States may not be as deep as many investors feared.
In the U.S. stock market, however, the Nasdaq fell, as
technology shares slumped after Sun Microsystems, a business
computer maker, reported an unexpected net loss and lower
revenues, causing several brokers to cut their ratings and
share price targets.
The dollar jumped to two-month highs versus the yen and
against a basket of currencies after economic reports bolstered
expectations that the Federal Reserve is nearing the end of a
rate-cutting cycle, enhancing the U.S. currency's appeal.
U.S. Treasury debt prices fell on data showing that fewer
U.S. jobs were lost in April than economists had feared and the
unemployment rate unexpectedly improved, raising hopes the U.S.
economic downturn is not gathering steam.
Investors hope that a stable job market will allay
consumers' fears at a time U.S. households have been grappling
with soaring energy and food costs and declining home values.
"People are willing to accept the fact that we may have a
very slow, stagnant economy. But the prospect of a sharp
downturn seems to be less and less likely, hence the sigh of
relief," said Peter Kenny, managing director at Knight Equity
Markets in Jersey City, New Jersey.
Shares on both sides of the Atlantic added to Thursday's
gains, pushing the Dow just 1 percent shy of erasing all its
losses this year before it retreated from earlier solid gains.
Stocks in the financial and energy-related sector pushed gains
in the broad market.
A 22 percent plunge in Sun Microsystems Inc <JAVA.O> shares
dragged on the Nasdaq and the S&P 500.
revenue due to a slowing economy.
The Dow Jones industrial average <> was up 14.01
points, or 0.11 percent, at 13,024.01. The Standard & Poor's
500 Index <.SPX> was up 1.84 points, or 0.13 percent, at
1,411.18. The Nasdaq Composite Index <> was down 11.61
points, or 0.47 percent, at 2,469.10.
Bank of America Corp <BAC.N>, the No. 2 U.S. bank, led
financial stocks with a 2.5 percent rise while shares of
Citigroup Inc <C.N>, the largest U.S. bank, climbed nearly 3
percent.
European shares posted their third weekly gain, spurred by
financials, after U.S. jobs data suggested the world's largest
economy was proving more resilient than expected.
Banks and other interest-rate sensitive stocks such as
insurers were among the largest positive influences on the
European market.
The FTSEurofirst 300 <> index of top European shares
rose 1.7 percent to close at 1,361.36 points, bringing the gain
for this week to about 2.6 percent.
Oil rose as data eased worries about the health of the U.S.
economy. The gains followed three days of losses amid concerns
that U.S. economic weakness would continue to blunt world oil
demand.
U.S. light sweet crude oil <CLc1> rose $3.19, or 2.84
percent, to $115.71 per barrel.
London Brent crude <LCOc1> was $3.34 higher at $113.84 in
late trading.
The dollar rose against major trading-partner currencies,
with the U.S. Dollar Index <.DXY> up 0.34 percent at 73.501.
The euro <EUR=> fell 0.34 percent at $1.5417, and against
the yen, the dollar <JPY=> rose 0.75 percent at 105.21.
The Labor Department said that 20,000 jobs were shed, far
fewer than the 80,000 that economists had anticipated. The
unemployment rate fell to 5 percent from 5.1 percent in March.
A Commerce Department report also showed a
stronger-than-expected 1.4 percent rise in March factory orders
added to the positive market tone.
Data in Europe also pointed to slowing economies. Euro-zone
manufacturing activity fell to its slowest pace in nearly three
years in April as Italy and Spain slipped further into
contraction in the latest evidence of regional cooling.
The RBS/NTC Purchasing Managers Index for the manufacturing
sector fell to 50.7 in April, just above the 50.0 mark that
divides growth from contraction, with indications that worse is
to come as new orders shrank for the first time since May
2005.
British house prices suffered their steepest annual fall in
15 years in April, stoking fears of a deep downturn. Figures
from HBOS, Britain's biggest mortgage lender, showed more than
25,000 people succumbed to bad debt in the first three months
of the year.
Gold recovered from a four-month low, with analysts
expecting future volatility to be driven by gyrations in the
dollar and possible fund sales.
Spot gold <XAU=> fell as low as $845 an ounce after the
dollar jumped following the U.S. jobs data, but the metal
rebounded when the price dipped below $850.
Spot gold prices <XAU=> was trading $4.65 higher to
$856.30.
The benchmark 10-year U.S. Treasury note <US10YT=RR> was
down 18/32, with the yield at 3.8433 percent. The 2-year U.S.
Treasury note <US2YT=RR> was down 3/32, with the yield at
2.4207 percent. The 30-year U.S. Treasury bond <US30YT=RR> was
down 31/32, with the yield at 4.5568 percent.
Growing optimism in Asia lifted Japan's Nikkei average
<> 2.1 percent, extending a rally that has wiped out
almost all its losses since mid-January. Shares across the rest
of Asia <.MIAPJ0000PUS> gained 1.5 percent.
(Reporting by Chris Reese, Gertrude Chavez-Dreyfuss, Robert
Campbell in New York and Amanda Cooper and Atul Prakash in
London; Editing by Leslie Adler)
