European markets close higher after positive US nonfarm payroll data

Key Points
  • The early moves come after gains on Wall Street in the previous session, with Asian stocks also edging higher overnight.
  • U.S. nonfarm payrolls data has been forecast to show the U.S. economy added 145,000 new jobs in September, Reuters reported, more than an increase of 130,000 in the previous month.

European stocks closed higher Friday afternoon after a key U.S. jobs report showed employment growing steadily and the jobless rate hitting a 50-year low, easing fears for the health of the world's largest economy.

The pan-European Stoxx 600 closed 0.6% following the data release. Utilities, tech, chemicals and healthcare stocks all rose more than 1% while autos remained a stubborn 0.7% below the flatline.

The FTSE 100 clawed back some of its weekly losses, gaining 1% by the the time of close. A corresponding weakening of sterling versus the dollar aided the FTSE basket.

Market sentiment was cautious ahead of U.S. payrolls data on Friday after weak manufacturing data earlier in the week sent equity markets tumbling. However, the Labor Department figures showed the U.S. economy adding 136,000 jobs in September.

The data provided some relief after a frail performance for world stocks in recent weeks, with investors gripped by political uncertainty in the U.S. and Hong Kong, geopolitical tensions in the Middle East, Brexit tensions and a flurry of weaker-than-anticipated economic data.

Market participants have also priced in an almost 90% chance that the U.S. central bank will cut interest rates by 25 basis points in October, according to CME Group's FedWatch tool.

The Fed has already cut interest rates twice this year, as policymakers try to limit the fallout caused by the ongoing U.S.-China trade war.

Back in Europe, European Council President Donald Tusk has said he is "open but not convinced" by British Prime Minister Boris Johnson's proposals for a Brexit deal.

On Thursday, Johnson said he felt he had made a "genuine attempt to bridge the chasm" with EU lawmakers. The U.K. is scheduled to leave the bloc at the end of the month, with time running out for both sides to reach a deal.

In corporate news, BP announced that CEO Bob Dudley will step down as of March next year to be replaced by current upstream chief executive Bernard Looney. The energy giant's shares traded 0.8% higher.

In terms of individual stocks, German software group Nemetschek gained 5% and Finnish food packager Huhtamaki climbed 4.1%, while British retailer Marks & Spencer saw its shares slide 4% after HSBC cut the stock from "hold" to "reduce." Spain's Banco BPM sank to the bottom of the European blue-chip index, shedding 5.3%.