European shares close up as bumper US jobs data quashes growth worries

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By Shashwat Chauhan and Pranav Kashyap

(Reuters) -European shares closed higher on Friday as a stronger-than-anticipated U.S. jobs report allayed growth fears in the world’s biggest economy, though they were down on the week as escalating conflicts in the Middle East kept risk-taking in check.

The pan-European STOXX 600 closed 0.4% higher, with most local bourses including Germany and France also clocking gains.

U.S. job gains increased by the most in six months in September and the unemployment rate fell to 4.1%, pointing to a resilient economy that likely does not need the Federal Reserve to deliver large interest rate cuts for the rest of this year.

“September’s nonfarm payroll report, particularly the fall in the unemployment rate, should remove any near-term concerns on the state of the US labour market,” Janet Mui, head of market analysis at wealth manager RBC Brewin Dolphin, said.

“With inflation heading in the right direction and ongoing expansion in the U.S. economy, this should increase confidence that a soft-landing is coming to realisation, barring any shock.”

Economically-sensitive bank stocks led gains amongst major STOXX sectors, rising 1.8%.

Automobiles gained 1.6% after the EU executive said the European Union will press ahead with hefty tariffs on China-made electric vehicles, even after the bloc’s largest economy, Germany, rejected them.

Yields on euro zone government bonds, which move inversely to prices, rose following the U.S. data. Utilities, often traded as bond proxies, fell 0.7%. [GVD/EUR]

Despite Friday’s gains, most European bourses clocked weekly losses, with STOXX down 1.8%, as investors shied away from risky assets such as equities amid escalating tensions in the Middle East.

Energy was the best performing STOXX sector this week, tracking elevated crude oil prices.

Personal and household goods and autos were amongst the worst performing sectors.

Among individual stocks, DSV gained 6.7% after the Danish transport firm raised $5.5 billion in a share issue to partially finance its acquisition of Schenker.

Elis jumped 10% after the French firm said it has terminated discussions with Vestis and UniFirst around a potential entry into the U.S. market.

Video game maker Ubisoft surged 33.5% after Bloomberg reported that major shareholder Tencent and the Guillemot family, its founders, were considering a buyout of the company.

Shares in shipping companies A.P. Moeller-Maersk and Hapag-Lloyd dropped 5.2% and 16%, respectively, after workers and U.S. port operators agreed a deal to end a strike on the East and Gulf coast docks far sooner than expected.

(Reporting by Pranav Kashyap and Shashwat Chauhan in Bengaluru; Editing by Sherry Jacob-Phillips and Andrew Heavens)