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European Stocks Jump After U.S. Jobless Rate Unexpectedly Drops
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By Adria Cimino

Dec. 4 (Bloomberg) -- European stocks surged, with the Dow Jones Stoxx 600 Index extending its weekly gain, after a report showed U.S. employers cut the fewest jobs in November since the recession began and the unemployment rate unexpectedly declined.

Randstad Holding NV, the world’s second-biggest temporary staffing company, climbed 7.7 percent after saying its U.S. business returned to growth. Baloise Holding AG, Switzerland’s third-largest insurer, rallied the most since August after UBS AG recommended buying the stock.

The Dow Jones Stoxx 600 Index of European companies jumped 1.5 percent to 250.07 at 3:44 p.m. in London, after earlier falling as much as 0.6 percent. The measure has advanced 3 percent this week as reports also signaled manufacturing in China and Europe expanded.

Payrolls in the U.S. dropped by 11,000 workers, less than the median estimate of economists surveyed by Bloomberg News, figures from the Labor Department showed today in Washington. The jobless rate fell to 10 percent, signaling the economic recovery is lifting the labor market out of the worst slump since World War II.

“This is an encouraging sign,” said Pierre-Alexis Dumont, a fund manager at OFI Asset Management in Paris, which oversees about $28 billion in assets. “It can allow the market to take off without the support of government stimulus plans. The main problem has been the idea of the loss of jobs weighing on spending and economic growth.”

Factory Orders

A Commerce Department report today showed orders placed with U.S. factories rose in October for the sixth time in the past seven months, propelled by gains in non-durable goods that overshadowed declines in spending on new equipment.

The Stoxx 600 has rallied 26 percent this year on signs government spending and record-low interest rates are helping to drag the economy out of recession.

National benchmark indexes rose in 16 of the 18 western European markets. France’s CAC 40 advanced 1.8 percent, while Germany’s DAX climbed 1.2 percent. The U.K.’s FTSE 100 increased 0.9 percent.

Randstad Holding NV climbed 7.7 percent to 32.81 euros. U.S. staffing returned to growth for the first time in three years, the company said on its Web site today. Randstad targets revenue of more than 17 billion euros ($25.4 billion) in the mid-term, and aims to increase earnings before interest, tax and amortization to 5 to 6 percent of sales, it said.

Adecco SA, the world’s largest temporary staffing company, surged 6.6 percent to 56.3 Swiss francs.

Baloise, Heineken

Baloise added 5 percent to 88.8 francs, its biggest gain since Aug. 24. UBS raised its recommendation on the shares to “buy” from “neutral.”

Heineken NV, the world’s third-biggest brewer, advanced 2.8 percent to 33.97 euros as Petercam raised its recommendation on the shares to “add” from “hold,” saying the stock looks “cheap.”

“Brewing stocks are cash-flow machines even in a downturn,” Kris Kippers, a Petercam analyst, wrote. “With cost cuts being a driver of bottom line and volumes holding relatively well, earnings power is strong.”

Abbey Plc soared 9.1 percent to 4.80 euros. Ireland’s biggest homebuilder said it anticipates “modest profitability” this financial year. Abbey posted net income of 2.9 million euros in the six months ended Oct. 31, compared with a loss of 3.9 million euros in the year-earlier period.

To contact the reporter on this story: Adria Cimino in Paris at [e-mail].
Last Updated: December 4, 2009 10:46 EST