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Market Update

European Resource Stocks Rally Again, Arcelor Plans $3 B Offering

Author: Lucy Stoeva
Last Update: 12:30 PM ET February 05 2016

4:00 PM Frankfurt, Germany – European stock trading was volatile and markets were mixed on the weak U.S. jobs data and a rally in mining, and gains in banking and retail sector. ArcelorMittal plans to launch a $3 billion offer to reduce net debt of $12 billion. BNP Paribas plans to cut costs and increase its dividend.

European stock markets were mixed on Friday as the negative surprise from the U.S. jobs data was offset by a strong rally in mining stocks, as well as gains in retail and banking sectors.

The latest U.S. job data showed non-farm payrolls rose 151,000 in January, down from an increase of 292,000 in December.

Unemployment rate stood at 4.9%, the lowest in eight years and average hourly wage also increased.

The weak job growth makes the scenario for a Fed interest rate hike in March less likely, especially after the central bank had raised its short-term interest rate in December.

Leading mining stocks extended yesterday’s rally as the U.S. currency weakened after the persistent sell-off in the last four weeks.

Anglo American soared 34.7%, Glencore jumped 20.3%, BHP Billiton was up 10.6%, and Rio Tinto climbed 8.8%.

In the U.K, retail comparable-store sales in the five weeks to January-end rose 1.4% from the year-earlier period, said BDO in its monthly High Street Sales Tracker report.

Fashion retailers sales increased 1.9% from a year ago period.

Tesco jumped 4.4%, Marks & Spencer Group added 2.3%, and home improvement retailer Kingfisher gained 3.2%.

In London, FTSE 100 index increased 67.89, or 1.16%, to 5,905.03 and in Frankfurt, the DAX index declined 17.60 or 0.19%, to 9,417.22.

In Paris, the CAC 40 index added 7.4, or 0.18%, to 4,234.36.

ArcelorMittal rebounded from early losses and added 4.30% to €3.47 late in the day after the giant steelmaker said it would issue shares worth $3 billion to reduce debt and deal with declining steel prices.

The Mittal family, which already owns about 40% of the company, will subscribe to its entitlement of the share issue for $1.1 billion.

BNP Paribas SA surged 7.69% to €42.59 after the largest French bank announced a cost cutting program in investment banking that aims to save €1 billion in costs by 2019.

The bank also proposed dividend of €2.31 per share for 2015, up from €1.50 a year earlier.

Revenue in the fourth quarter increased 3% to €10.45 billion from the year-ago period.

Net income dropped 52% to €665 million euros due to a goodwill write-down on its Italian banking unit.

Finmeccanica SpA plunged 9.4% to €9.44 after the Italian prosecutors launched its investigation of the deal merger deal with Japan-based Hitachi.

Nokian Renkaat Oyj gained 8.1% to €34.02 after the Finnish tire maker said fourth-quarter net sales increased 11.1% to €422.3 million from the same period a year ago.

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Sources: Data collected by 123jump.com and Ticker.com from company press releases, filings and corporate websites. Market data: BATS Exchange. Inc