Europe open: Shares rise as investors look to nonfarm payrolls

LONDON (ShareCast) - (ShareCast News) - European stocks posted healthy gains in early trade as investors looked to the release of the US nonfarm payrolls report for further clues on the timing of a rate hike by the Federal Reserve. At 0850 BST, the benchmark Stoxx Europe 600 index was up 1.1%, Germany's DAX was 1.2% firmer and France's CAC was up 1.4%.

"As Friday kicks off we are seeing some confidence returning to equities and investors, who have had to endure some nail-biting sessions recently, will be hoping for a subdued end to the week," said Mike McCudden, head of derivatives at Interactive Investor.

"After what has been another topsy-turvy week for equities, investors will be bracing themselves for US jobs data which may usher in a rate hike before year is out. However, while inflation remains subdued, the Fed can afford to hold off until Asian markets calm down. That may see us in to the new year, but regardless, markets have priced in the inevitable hike and the UK will probably follow suit." On the corporate front, shares in Telecom Italia (Other OTC: TIAJF - news) rose following reports that France's Vivendi (Milan: VIV.MI - news) has taken steps to raise its stake in the telecoms group to around 19% of the ordinary share capital.

Elsewhere, Air-France-KLM edged up after the company announced plans for significant job cuts, while Lufthansa rallied after HSBC raised the stock to 'buy' from 'hold'.

On the downside, Experian (Other OTC: EXPGF - news) shares slumped after it emerged that T-Mobile customers and potential customers in the US may have had their private information exposed after the credit agency was hacked.

On the economic calendar, the focus will be firmly on the US nonfarm payrolls. Societe Generale (Swiss: 519928.SW - news) said payrolls should reaccelerate in the month of September, from a lowly 173,000 in August to 225,000, while the unemployment rate is expected to move down by a tick to 5.0%.

"We also expect the prior month estimate to be revised up by as much as 74,000, as the BLS has historically significantly underestimated the change in nonfarm payrolls in August," it said.

"Overall, the report should signal a continued tightening of the labour market."