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Market Update

Late Rebound In European Indexes After Mixed U.S. Employment Data

Author: Lucy Stoeva
Last Update: 10:38 AM ET May 06 2016

4:00 PM Frankfurt, Germany – European markets erased earlier losses in a late rebound after the U.S. employment data sent offered mixed outlook. ArcelorMittal said loss narrowed and the steelmaker kept its 2016 guidance unchanged. Banca Monte dei Paschi di Siena posted higher-than-expected net income.

European markets erased earlier losses in a rebound near closing after the announcement of the closely watched U.S. employment data.

U.S. net nonfarm jobs rose 160,000 in April, the smallest increase in seven months, and jobs in construction industry were unchanged, while retail sector trimmed jobs, the Labor Department said late on Friday.

Unemployment rate was steady at 5% only because the number of people looking for jobs declined 362,000. The employment-to-population ratio fell to 59.7% in April.

Average hourly earnings grew $0.08 in April, or 0.3% from the previous month and 2.5% from the same period a year ago.

Energy companies retreated, tracking a decline in volatile crude oil prices. Brent crude oil futures dropped 1.3% to $44.42, while West Texas Intermediate crude oil fell 1.2% to $43.79 per barrel.

Mining stocks also recorded losses, with Anglo American losing 3.2%, Antofagasta down 1.4%, and Glencore erasing 3.2%.

Steelmaker ArcelorMittal was among the largest losers, down 4.8%, after the company kept its 2016 guidance unchanged.

The market uncertainty led to a hike of more than 1% in gold prices. Randgold Resources Limited, the gold miner, stock was among the few gainers, up 4.2%.

In London, the FTSE 100 index lost 16.96, or 0.28%, to 6,100.29, while in Frankfurt, the DAX index added 19.78, or 0.20%, to 9,871.64.

In Paris, the CAC 40 index fell 25.31, or 0.59%, to 4,294.15.

For the week, market indexes in Germany, France and U.K. declined between 2% and 3%.

ArcelorMittal plunged 4.8% to €4.47 after the world’s largest steelmaker left its 2016 earnings forecast unchanged and said it was still concerned about excess steel capacity in China.

First-quarter net loss narrowed to $416 million, compared with net loss of $728 million in the same period a year earlier.

Revenue dropped 22% to $13.4 billion from a year ago, partially due to lower prices for steel and iron ore.

Banca Monte dei Paschi di Siena S.p.A rose 2.7% to €0.65 after the troubled Italian lender reported better-than-expected first-quarter net profit.

Net income fell to €93.2 million from €143.7 million a year earlier. The results were better-than-expected on the lower loan loss provisions of €346 million compared to €468 million a year ago.

Revenue fell to €1.19 billion in the quarter from €1.37 billion a year earlier, hurt by volatile financial markets, faltering loan growth and record-low interest rates.

Trading income dropped 41% to €166 million.

Fabrizio Viola, CEO, said the lower loan loss provisions were the result of the ongoing restructuring and the bank was on track with its bad loan reduction plans.

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