European shares slide, oil recovers, merchants await US jobs information

LONDON, August 5 (Reuters) – European stocks fell slightly on Friday but are still set for weekly gains, while traders await US jobs data late in the session to provide clues to the health of the world’s largest economy.

The MSCI World Stock Index, which tracks stocks in 47 countries, was up 0.2% and is tracking a weekly gain of 0.7% – marking a third straight week of gains. (.MIWD000000PUS).

Asian shares gain overnight but at 0823 GMT, STOXX 600 was down 0.1% (.STOXX)French CAC 40 (.fchi) and German DAX (.GDAXI) flat. London’s FTSE 100 fell 0.2% (.FTSE).

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Central banks around the world have raised interest rates in an attempt to limit rising inflation, but European stocks have rebounded to near two-month highs this week.

“Stock futures have become comfortable with the idea that the rate hikes central banks are making will be enough to curb inflation,” said Kiran Ganesh, multi-asset strategist at UBS. long term”.

But other asset classes are reflecting a slowdown.

The closely watched portion of the US Treasury yield curve measuring the gap between yields on 2- and 10-year Treasuries hit 39.2 basis points on Thursday, the deepest inversion since 2018. 2000.

An inverted yield curve is often considered an indicator of a future recession.

Oil rose, recovering after the previous session saw prices hit their lowest levels since February. Concerns about supply shortages were enough to remove concerns about weakening fuel demand. read more

The global crude oil market remains firmly in a downturn, where prices are higher than in the months ahead, indicating tight supply.

Investors will be watching US jobs data to see if the aggressive pace of interest rate hikes by the US Federal Reserve is starting to slow economic growth.

Data is expected to show that nonfarm payrolls rose 250,000 jobs last month, after rising 372,000 in June.

ING economists wrote in a note to clients: “So far, markets are reacting to stronger economic data as good news. But at some point they are likely to question asked if Fed tightening would have the desired effect if the economy remains strong.

“At that stage, they might start to worry that rates could go higher, or higher, for longer.”

UBS’s Ganesh thinks a nonfarm payrolls figure between 200,000 and 300,000 would be appropriate for a “soft landing” for the economy, while a higher number suggests the Fed needs more rate hikes to contain it. demand.

Thursday’s data showed that the number of Americans filing new claims for unemployment benefits rose last week, suggesting weakness in the labor market may be on the way. read more

Cleveland Fed President Loretta Mester took on a hawkish tone on Thursday, saying the Fed should raise rates above 4% to bring inflation back to its target level. read more

The US dollar index was up about 0.2% and the euro was down 0.2% at $1.02265. The Australian dollar, seen as a liquid proxy for risk appetite, was down 0.1% at $0.6958. read more

The British pound was down 0.1% at $1,215.

The Bank of England raised interest rates by the most in 27 years on Thursday and warned that a protracted recession is coming. read more

European government bond yields are mostly 1 to 2 basis points higher, with the German benchmark 10-year yield at 0.812%.

Official data showed that German industrial production rose unexpectedly but modestly in June.

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Reporting by Elizabeth Howcroft; Edited by Bradley Perrett

Our standards: Thomson Reuters Trust Principles.

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