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Markets rally after forecast-busting US jobs data

By Pan Pylas

Associated Press

Published: Friday, Feb. 3 2012 7:25 a.m. MST

LONDON — Stocks spiked higher on Friday after forecast-busting U.S. jobs figures reinforced hopes that the recovery in the world's largest economy is gathering pace at a time when other regions, notably Europe, may be heading back into recession.

Figures from the Labor Department showed that employers in the U.S. added 243,000 jobs in January. As well as being the highest in nine months, the gain was around 100,000 more than anticipated.

The advance also contributed to a fifth straight fall in the U.S. unemployment rate. At 8.3 percent, it's the lowest in three years.

The January jobs report was filled with other encouraging data and revisions. Hiring was widespread across many high-paying industries and pay increased, too.

"In terms of the broader outlook, one report does not a trend make but there is little doubt that U.S. economic data continues to surprise on the upside," said Dan Greenhaus, chief global strategist at BTIG.

"We'll have to wait until February's report to see if this continues but for now, the risk rally is clearly on and from an economic perspective, it is most certainly warranted," Greenhaus added.

In Europe, the FTSE 100 index of leading British shares was up 1.2 percnet at 5,865 while Germany's DAX rose 1.4 percent to 6,746. The CAC-40 in France was 0.6 percent higher at 3,398.

Wall Street was opened for solid gains, too — Dow futures were up 1 percent at 12,790 while the broader Standard & Poor's 500 futures rose the same rate to 1,336.

Market sentiment has been fairly upbeat so far in 2012, partly on the back of a run of fairly strong U.S. economic data, which has convinced investors that the U.S. economy is over its soft patch from last summer.

The state of the U.S. economy contrasts with that of Europe, which appears headed for recession.

Official figures showed retail sales in the 17-nation eurozone dropped 0.4 percent during December, in contrast to expectations for an increase of the same amount.The data reinforced expectations that the eurozone contracted during the fourth quarter of the year. Eurostat is due to publish its first estimate for the quarter on Feb. 15.

The euro was garnering support alongside stocks despite fears over the economic outook in the eurozone — when appetite for risk is elevated, the euro often finds favour. It was trading 0.3 percent higher at $1.3177 despite the retail sales disappointment.

The focus on the U.S. has proved a welcome diversion for some traders from monitoring the daily grind of Europe's debt crisis, where much hinges on whether Greece can secure a deal with its private creditors, as is anticipated. A deal is expected soon, though that has been the official line for a few weeks.

Earlier in Asia, the picture was mixed.

Japan's Nikkei 225 index fell 0.5 percent to close at 8,831.93 but Hong Kong's Hang Seng ended marginally higher at 20,756.98.

Mainland Chinese shares extended gains fueled by news of fresh support for the farming and small-business sectors, with the benchmark Shanghai Composite Index rising 0.8 percent to 2,330.41 while the Shenzhen Composite Index added 1.5 percent to 878.29.

Oil markets were relatively subdued. Benchmark oil for March delivery was down 11 cents to $96.25 per barrel in electronic trading on the New York Mercantile Exchange.

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Pamela Sampson in Bangkok contributed to this report.

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