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Europe: Shares rise on strong results, upbeat US jobs data

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[BENGALURU] European shares rose on Friday, recovering from their worst day in six weeks with support from robust jobs data from the United States and strong results from Adidas and HSBC.

The pan-European STOXX 600 index closed up 0.4 per cent, rising up to 0.6 per cent after strong US jobs data, before trading back at mid-day levels. On the week, the index fell 0.2 per cent after two week of gains.

Data on Friday showed that US job growth surged in April and the unemployment rate dropped to a more than 49-year low of 3.6 per cent, pointing to sustained strength in economic activity.

"The April (jobs) report allows the US Federal Reserve to remain comfortably on hold for the next few meetings as it awaits more data, particularly on global risks and the inflation outlook," said analysts at TD Securities in a note.

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Investors tend to dump stocks in a rising interest rate environment due to higher cost of capital and better appeal for bonds.

Shares around the globe had fallen on Thursday after the Fed signalled little appetite to adjust interest rates anytime soon, dampening hopes of a rate cut among market participants.

Gains of nearly 2 per cent by London-listed shares of HSBC Holdings after the lender beat quarterly profit estimates, was the biggest boost to the pan-region index.

French lender Societe Generale also rose as its capital buffer was stronger than expected, helping investors shrug off a decline in quarterly net profit.

The personal and household goods sector rose 1.2 per cent. Adidas jumped almost 10 per cent to hit a record high after the sportswear maker's quarterly net profit rose.

"Not many European stocks are racking up all-time highs, and that underlines the bullish sentiment," said David Madden, an analyst at CMC Markets, London.

Basic resources stocks gained 1.4 per cent as copper prices rebounded.

Fiat Chrysler jumped 4.6 per cent after the carmaker said new US pickup truck models would help the automaker achieve its 2019 profit targets and offset a weak first quarter.

Meanwhile, Air France-KLM tumbled 5.5 per cent as the Franco-Dutch group blamed higher fuel costs and tough price competition for its first-quarter loss.

Reinsurer Swiss Re AG slid 3 per cent to be one of the biggest drags on STOXX 600 on an unexpected fall in quarterly net profit.

A more than 7 per cent fall by German telecoms group Freenet was the worst on the broader index after UBS downgraded the stock's rating to 'sell'.

REUTERS