Europe: Shares drop after disappointing US jobs data

[LONDON] European shares fell on Friday after much weaker US jobs data than expected, while Accor soared on reported plans by a Chinese rival to raise its stake in the hotel group.

The US economy created the fewest number of jobs in more than five years in May, suggesting weakness in the labour market and dashing expectations of a interest rate hike this month.

The FTSEurofirst 300 fell 0.9 per cent to its lowest point in one week and a half. The index fell 2.4 per cent for the week after gaining for the previous three weeks running.

"The US non-farm payroll data was crazy and completely unbelievable and this is the last set of important data before the Fed meeting," said Naeem Aslam, chief market analyst at Think Forex.

Economists now expect the Fed to wait until July before raising rates, meaning that any monetary policy decision in the world's biggest economy will be made after a UK vote on whether to leave the European Union takes place in three weeks time.

Europe's auto sector index fell 2.3 per cent, making it the worst-performing sector, as reduced expectations of an imminent US rate hike weakened the dollar and sent the euro rallying to a four-week high. A stronger euro is a disadvantage for the export-oriented sector.

Banks followed with a 2.2 per cent drop.

In the sector, Banco Popolare fell as 5.2 per cent to touch a record low after Italy's fourth-largest bank priced its 1 billion euros rights issue.

Accor shares rose 6.7 per cent - the top gainer on the FTSEurofirst. French newspaper Le Figaro reported that Jin Jiang was considering increasing its Accor holding to 29 per cent. Accor declined to comment.

Commodities stocks were in demand, with the European basic resources index rising 1.7 per cent, as the lower dollar pushed up metal prices.

Airbus fell 3.5 per cent after Qatar Airways canceled its first Airbus A320neo jet due to delays in deliveries.

REUTERS