European shares edge down ahead of U.S. jobs data

PARIS Fri Jan 4, 2013 4:21pm IST

Workers speak above an electronic information board at the London Stock Exchange in the City of London January 2, 2013. REUTERS/Paul Hackett

Workers speak above an electronic information board at the London Stock Exchange in the City of London January 2, 2013.

Credit: Reuters/Paul Hackett

Stocks

   

PARIS (Reuters) - European shares inched down on Friday as signs of rising concerns among U.S. Federal Reserve members about the central bank's quantitative easing program prompted investors to book a portion of recent strong gains.

Investors were also cautious ahead of U.S. non-farm payrolls data for December, due later in the session, despite Thursday's forecast-beating jobs data for the private sector.

At 4:06 a.m. ET, the FTSEurofirst 300 .FTEU3 index of top European shares was down 0.04 percent at 1,162.15 points, retreating from near-two-year highs hit in the previous session, while the euro zone's blue chip Euro STOXX 50 .STOXX50E index was down 0.1 percent, at 2,698.16 points.

"The market is getting quite 'overbought', both U.S. and European stocks, and there's a risk of a sell-off if the payrolls figures are disappointing," FXCM analyst Nicolas Cheron said.

"A lot of fund managers are being sucked in, buying the market because of fears of missing the rally. We're set for a correction wave sometime in the next two to three months. It might not start in the short term, but it's definitely coming."

The FTSEurofirst 300 hit its most "overbought" level in three years this week, with its 14-day relative strength index (RSI) rising to 72.4, a signal that the market is ripe for a pull-back in the short term.

Minutes from the Fed's December policy meeting released on Thursday showed some voting members of the Federal Open Market Committee were increasingly worried about the potential risks of the Fed's asset purchases on financial markets.

U.S. non-farm payrolls data, due at 8:30 a.m. ET on Friday, is expected to show employers added 150,000 jobs last month.

On Thursday, the ADP National Employment Report showed the private sector added 215,000 jobs last month, beating economist forecasts, but FXCM's Cheron warned it doesn't necessarily means that Friday's broader payrolls data will also be better-than-expected.

"Despite common belief, the correlation between ADP figures and payrolls data has been pretty low historically," he said.

Analysts at Societe Generale, however, are more bullish, betting on the creation of 225,000 jobs last month, well above the consensus.

"Labor market conditions probably improved substantially in the final month of 2012 ... we expect risky assets to rally intraday due to the positive surprise element," the analysts wrote in a note.

Cyclical mining shares were the top losers on Friday, with Randgold Resources (RRS.L) down 2.9 percent and Lonmin (LMI.L) down 1.5 percent.

Big pharma stocks, seen as defensive plays, gained ground, with GlaxoSmithKline (GSK.L) up 0.4 percent, Novartis (NOVN.VX) up 0.4 percent and AstraZeneca (AZN.L) up 0.2 percent.

Around Europe, UK's FTSE 100 index .FTSE was down 0.1 percent, Germany's DAX index .GDAXI down 0.1 percent, and France's CAC 40 .FCHI down 0.2 percent.

(Reporting by Blaise Robinson; Editing by Toby Chopra)

Religion and Politics

REUTERS SHOWCASE

Fund Raising

Fund Raising

Flipkart raises $700 million in fresh funding.   Full Article 

Reforms Push

Reforms Push

Modi may order insurance, coal reforms if vote delayed - officials.  Full Article 

Reuters Exclusive

Reuters Exclusive

India looks to sway Americans with nuclear power insurance plan  Full Article 

To Boost Growth

To Boost Growth

Crank up public spending to revive growth - chief economic adviser.   Full Article 

Bold Steps

Bold Steps

SpiceJet rescue plan marks bold bet on Indian aviation recovery.   Full Article 

New Airline

New Airline

Tata, Singapore Air venture Vistara to take off on Jan 9.  Full Article 

Online Sales

Online Sales

Knock knock. Who's there? Amazon's best-selling holiday author.  Full Article 

Hacking Attack

Hacking Attack

N.Korea says did not hack Sony, wants joint probe with U.S.  Full Article 

Reuters Poll

Reuters Poll

BSE Sensex to hit 32,980 by December 2015  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device  Full Coverage