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European markets advance as weak US data soothes taper worries

·3-min read
Japanese stocks have been given a boost by news that Yoshihide Suga will step aside as prime minister, raising hopes his successor will push through a huge stimulus package (AFP/Kazuhiro NOGI)

Global stock markets rose on Monday after a big miss on US jobs creation last month fuelled optimism that the Federal Reserve will hold fire on tapering its massive financial support programme.

Asian and European equities also rose before this week's eurozone interest rate decision, but US markets remain closed for a holiday.

Aluminium prices soared to a new 10-year peak at $2,775.50 per tonne as a military coup in major bauxite producer Guinea further disrupted tight global supplies. Bauxite is an ore used to make aluminium.

"Stocks throughout Europe and Asia are heading higher after Friday's weak payrolls figure," said IG analyst Joshua Mahony.

"While the US recovery is clearly on unstable footing, it also brings hope that tapering could be delayed."

The US economy added far fewer jobs than expected in August as businesses grappled with the Delta wave of Covid-19, data showed before the weekend.

Employment rose by 235,000 jobs last month, or about a third of the expected gain.

The world's biggest economy has faltered in the face of the Delta wave of Covid-19, which sent infection rates around the world spiking in recent weeks.

Fed boss Jerome Powell indicated last month that officials would begin reducing support for the US economy, which has been a key pillar of the economic and market surge for more than a year, by the end of 2021 -- but would take it slowly.

He did not provide a timetable, and Friday's jobs data was considered a crucial guide to when it would begin, with some saying a well-below-par figure would mean policymakers would not move until November or December.

Back in the eurozone, the European Central Bank will convene on Thursday for an interest rate decision, with markets hoping for hints on when the institution might start easing its own vast pandemic-era stimulus.

Policymakers will be anxious that eurozone inflation surged to three percent in August as economic recovery gathered steam, overshooting the ECB's new two-percent target.

Oil fell after Saudi Arabia slashed the prices it charges Asian clients, just days after OPEC and other major producers agreed last week to press ahead with lifting output.

"Markets appear to have interpreted this that there might be rising concerns about the demand outlook, especially since September output has already seen another increase of 400,000 barrels a day," said market analyst Michael Hewson at CMC Markets UK.

"On the plus side this should alleviate some of the concerns about higher prices exerting upward pressure on inflation," he added.

- Tokyo extends rally -

Asia built on last week's broadly positive performance, with star performer Tokyo surging 1.8 percent.

The Nikkei 225 index is now closing in on levels not seen in more than 30 years.

The gains came after Prime Minister Yoshihide Suga said he would not stand for re-election to lead his Liberal Democratic Party in a vote this month, effectively stepping down from the premiership.

The news fanned speculation that his successor will push for a big-spending pandemic stimulus package to kickstart the world's third-largest economy.

- Key figures around 1530 GMT -

London - FTSE 100: UP 0.7 percent at 7,187.18 points (close)

Frankfurt - DAX 30: UP 1.0 percent at 15,932.12 (close)

Paris - CAC 40: UP 0.8 percent at 6,743.50 (close)

EURO STOXX 50: UP 1.1 percent at 4,246.13

Tokyo - Nikkei 225: UP 1.8 percent at 29,659.89 (close)

Hong Kong - Hang Seng Index: UP 1.0 percent at 26,163.63 (close)

Shanghai - Composite: UP 1.1 percent at 3,621.86 (close)

New York - Dow: Closed for public holiday

Euro/dollar: DOWN at $1.1861 from $1.1880

Pound/dollar: DOWN at $1.3823 from $1.3871

Euro/pound: UP at 85.81 pence from 85.65 pence

Dollar/yen: UP at 109.84 yen from 109.71 yen

West Texas Intermediate: DOWN 0.6 percent at $68.86 per barrel

Brent North Sea crude: DOWN 0.7 percent at $72.13 per barrel

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