By Amanda Cooper
LONDON, April 4 (Reuters) - European shares rose in a
volatile session on Friday, led by a rally in mining shares and
UBS <UBSN.VX>, which came under pressure to break up, while a
surprisingly large fall in U.S. jobs data capped gains.
The FTSEurofirst 300 index <> of top European shares
ended 0.5 percent higher at 1,318.4 points.
The index rose 4.1 percent this week, making this its best
weekly performance in over a year, thanks to a 5 percent rally
in bank stocks <.SX7P> after UBS unveiled large first-quarter
writedowns to purge its books of any assets linked to the
slumping U.S. housing market.
Banks were mixed on Friday, although UBS was among the top
individual gainers, rising by more than 3 percent, after former
chief executive Luqman Arnold pushed to break up the Swiss bank.
But the focal point for investors was the U.S. employment
report, which showed 80,000 jobs were lost in March, making this
the third consecutive decline and the largest drop in five
years. Forecasts were for a fall of 60,000.
"The market is already anticipating in the short term that
the news is going to be bad, we can now write off the first half
of this year in terms of anticipating any growth," said Henk
Potts, a strategist with Barclays Wealth.
"The big question for investors is have the aggressive
interest rate cuts from the Fed and the stimulus packages coming
through ... been enough to generate a bounce-back in the broader
economy in the second half?" he said, adding Barclays Wealth
believed they were.
The Federal Reserve has cut U.S. rates by 200 basis points
to 2.25 percent to avert widespread deterioration in growth
because of the ongoing credit crisis. The FTSEurofirst has
fallen by about 13 percent so far this year as concern has grown
over the potential for recession in the United States.
"This will put the focus back on the economic reality and
get us back to a more gloomy point of view. We've seen a
fantastic rally this week led by banks and retailers," said IG
Index analyst David Jones.
The European market posted its worst quarterly loss in five
and a half years in the first three months of this year,
dragging down by the size of the mounting losses at investment
banks linked to subprime lending.
Rio Tinto shares <RIO.L> were the top weighted gainers on
the broader European market on Friday after Chief Executive Tom
Albanese said the company's portfolio of growth projects would
drive its shares up faster than those of its rival BHP Billiton
<BLT.L>, undermining the case for BHP's all-stock hostile
takeover offer.
Rio shares rose 4.6 percent while BHP shares were up 3.6
percent.
Rising base metal prices helped push up Xstrata <XTA.L> by
3.6 percent and Anglo American <AAL.L> by 2.4 percent.
British Energy jumped more than 7 percent on a media report
that EDF planned a bid, making it the top percentage gainer in
Europe. Sources familiar with the matter told Reuters EDF is
expected to submit a non-binding offer for British Energy, which
is in talks with several companies about a possible sale or
partnership.
British Energy declined to comment, while EDF reiterated it
was keen to take part in the development of nuclear power
generation in Britain.
(Editing by Erica Billingham)
