London: European shares fell in early trade on Friday as the dollar edged lower ahead of US jobs data which could indicate whether more stimulus measures would be introduced to fuel the flagging recovery.
However, Swiss Actelion rose 9.5%, building on the previous day’s gains, with traders citing further talk that Europe’s largest biotech could be an acquisition target.
At 2:00pm, the FTSEurofirst 300 index of top European shares was down 0.3% at 1,067.43 points, after ending flat in the previous session.
“There is some nervousness. We have seen in the course of the last couple of days that the market is reacting substantially to any indication about the labour statistics,” said Luc Van Hecka, chief economist at KBC Securities.
“But fundamentals are still relatively strong and earnings growth has been quite substantial. I suppose that most earnings will be within expectations or slightly above them. It should be supportive for the market.”
Energy shares lost 0.8%, tracking losses in crude oil prices. BP, BG Group and Repsol fell 0.6 to 0.8%.
Mining shares were up, with the declining dollar helping metal prices and after U.S. aluminium group Alcao beat analysts’ expectations with its third quarter results.
BHP Billiton was up 1%, while Rio Tinto edged up 0.5%.
WEAK DOLLAR WEIGHS
The US currency came under pressure again on Friday, starting to lose gains made from a bout of profit-taking to adjust positions ahead of the jobs data and Group of Seven (G-7) and IMF meetings later in the week.
Bets against the dollar have grown significantly since September because of increased expectations the Federal Reserve will print money to buy debt, and that may limit the downside if the payrolls number is a lot lower than expected.
The 90-day inverse correlation between gold and the dollar is the strongest it has been all year, meaning when one falls, the other is very much likely to rise based on price action over the past three months.
“We are waiting for the right trigger and we have been for more than a month now,” said Rob Koenders, an asset manager at Dutch Harmony Vermogensbeheer, adding that the build-up to recovery was similar to 2003 and 2004.
Concerns that a stronger euro may weigh on the pace of Europe’s economic recovery were fuelled on Friday by German exports, which fell in August for the second consecutive month and narrowing the trade balance.
Across Europe, Britain’s FTSE 100, Germany’s DAX and France’s CAC 40 fell between 0.1 and 0.3%
Commerzbank was among the top gainers in Europe, up 2.9% after sources said the German bank would not issue new shares at current prices.