(Updates after U.S. ADP jobs report)
By Jeremy Gaunt, European Investment Correspondent
LONDON, March 5 (Reuters) - Financial market focus centred
on the U.S. economy's key services sector on Wednesday after a
weaker-than-expected private jobs report cut into European stock
gains and kept the dollar on the back foot.
Oil rose above $100 a barrel again.
Wall Street looked set for a positive start but one weighed
on by a report showing that U.S. private employers cut 23,000
jobs in February, contrary to expectations of a gain.
The Institute of Supply Management's non-manufacturing index
due at 1500 GMT was seen rising above its record low in January
but still staying within territory that suggests economic
contraction rather than expansion.
A second month of shrinkage in the index would lend
considerable support to analysts who say the United States is
already in recession.
Along with the ADP employers report, the data is expected to
consolidate investor views about U.S. jobs data to be released
on Friday, a major indicator of likely interest rate moves.
"The ADP report has given us a heads up that the jobs report
on Friday could be worse than expected. All the other jobs
indicators are also consistent with a softening U.S. labor
market," said Shaun Osborne, chief current strategist at TD
Securities in Toronto.
European shares gained, partly on the back of a report that
bon insurer Ambac Financial Group <ABK.N> was moving closer to a
bail out, helping shares bounce back after five consecutive days
of losses.
Investors have been concerned that bond insurers are facing
difficulties, stemming from the U.S. subprime mortgage crisis,
which could add a whole new dimension to the global credit
crisis.
The FTSEurofirst300 index <> was up 0.8 percent, off
its pre-ADP highs.
Earlier, Japanese stocks ended slightly lower at a six-week
closing low.
"Investors know shares are cheap but cannot bring themselves
to actually buy them," said Naoteru Teraoka, general manager of
investment management division at Chuo Mitsui Asset Management.
The benchmark Nikkei average <> ended down 0.2 percent
or 20.22 points at 12,972.06, the lowest close since Jan 23. The
broader TOPIX index <> was down 0.1 percent at 1,263.91.
OIL SPIKES, DOLLAR FIRMS
Oil prices moved above $100 after an almost 3 percent tumble
on Tuesday, as growing signs that OPEC would not raise output at
its latest meeting balanced expectations of bearish U.S. oil
stocks data.
U.S. light crude for April <CLc1> was up $1.09 cents at
$100.58 a barrel, still below Monday's record high of $103.95.
"The market, not only oil but all commodities, will remain
supported," said Ken Hasegawa, manager of commodities
derivatives at broker Newedge in Tokyo.
The dollar failed to hang on to early gains and was flat
against a basket of six major currencies at 73.652 <.DXY>.
The euro rose about 0.1 percent to $1.5222 -- close to this
week's record $1.5275 <EUR=>. The dollar was up 0.1 percent
versus the yen at 103.42 yen <JPY=>.
The dollar has fallen roughly 5 percent against the yen in
the past week while the euro has climbed around 3.5 percent
versus the U.S. currency.
Euro zone government bond prices were lower. The benchmark
10-year bond yield <EU10YT=RR> was up 2 basis points at 3.836
percent.
(Editing by Mike Peacock)
