US news on jobs lifts investors' spirits

GOOD NEWS from the US buoyed investors’ pre-Christmas spirits yesterday and increased feelings of goodwill towards all equities.

The number of people claiming unemployment payments in the US fell 19,000 to 366,000 last week, its lowest level since 2008. At the same time, US and German manufacturing showed signs of growth going into 2012.

The news drew investors back to equities and boosted benchmark indices on both sides of the Atlantic.

DUBLIN

The positive sentiment boosted shares in Dublin, lifting the benchmark Iseq index by more than 1 per cent to 2,708.27. However, dealers pointed out that trade was light on the Irish market.

Packaging group Smurfit Kappa was the star turn, jumping 8 per cent to €4.539, helped by a note from stockbroking firm Davy, which rated it a buy and argued that its price was underperforming.

Building materials group CRH rose 1.5 per cent to €13.38 ahead of it being included in London’s benchmark FTSE 100 index from close of business today.

The Iseq is rebalancing today. This will be good news for food group Kerry, which added 1.08 per cent to close at €27.715, and titanium miner Kenmare, which rose 1.8 per cent to 50.4 cent.

Bookmaker Paddy Power, which earlier this week announced that it would be providing risk management services to the Canadian Lottery’s sports betting division, was also strong, gaining 1.3 per cent to end the day at €40. It touched €40.40 yesterday afternoon.

Cider maker C&C closed almost 0.9 per cent up at €2.827 as some investors presumably anticipated that sales would get an extra seasonal fizz.

LONDON

British stocks advanced, rebounding from the biggest decline in three weeks, as US economic data topped forecasts and Old Mutual led insurance companies higher after announcing plans to sell its Nordic operations.

Old Mutual, Britain’s third largest insurer, surged the most in more than two years. Shares of Prudential and Standard Life also advanced.

Vedanta Resources led gains in mining companies, while Collins Stewart Hawkpoint surged after agreeing to be bought by Canaccord Financial, Canada’s largest non-bank brokerage.

Vedanta gained 1.5 per cent to 1,081 pence, Xstrata increased 1 per cent to 948 pence, and Anglo American gained 1.3 per cent to 2,308 pence.

Collins Stewart soared 75 per cent to 88.5 pence, the biggest gain since at least 2006. Canaccord agreed to buy the stockbroker for £253.3 million in its largest takeover, expanding the wealth management and investment-banking businesses in Britain.

International Personal Finance, which makes unsecured loans to low-income households in eastern Europe, slid 9.2 per cent to 165 pence, saying currency movements would harm full-year earnings.

Irish-based, London-listed Cove Energy was steady at 99.75 pence after topping 100 pence earlier in the week. The company is seeking offers for some of its Mozambique interests, and a number of analysts recommended the oil and gas explorer as a buy.

EUROPE

European stocks advanced as the positive economic data sparked speculation that this year’s slump in equities is not commensurate with the outlook for corporate earnings.

The Stoxx Europe 600 Index gained 1 per cent to 234.73 at the close in London on the back of the positive US jobless claims figures. The benchmark gauge has still lost 15 per cent this year as the euro area’s sovereign debt crisis spread to Italy and Spain and US economic growth slowed.

“I’m looking at attractive valuations on equities,” Tom Elliott, a global strategist at JPMorgan Asset Management, which has about $1.3 trillion in client funds, told Bloomberg Television.

Commerzbank rose 6.7 per cent to €1.31. Raiffeisen Bank International rallied 5.3 per cent to €18.40.

A gauge of banking shares on the Stoxx 600 gained 1.3 per cent.

Europe’s biggest travel company TUI jumped 12 per cent to €4.55 after Cheuvreux and other investment advisers upgraded its shares to “outperform” from “underperform.”

US

Early trade in the US showed that the good news buoyed investors’ confidence.

Stocks rose, snapping a three-day decline in the Standard Poor’s 500 Index, as the data on jobless claims and manufacturing signalled a strengthening economy.

FedEx jumped 6.4 per cent after earnings beat analysts’ estimates.

JPMorgan Chase advanced 1.5 per cent as financial stocks gained after Spain sold more debt than it had planned.

Novellus Systems surged 20 per cent as Lam Research agreed to acquire the company. – (Additional reporting: Bloomberg)