European Stocks, U.S. Index Futures Advance After Jobs Report

By Adria Cimino

Jan. 9 (Bloomberg) -- European stocks and U.S. index futures climbed after a report showed the American economy lost fewer jobs last month than some economists forecast.

Daimler AG and Michelin & Cie., which both make more than 20 percent of their sales in North America, advanced at least 3.1 percent.

The MSCI World Index has decreased 1 percent this week as signs from Wal-Mart Stores Inc. and Intel Corp. that profits are deteriorating overshadowed government efforts to revive growth with stimulus packages and interest-rate cuts. Stocks pared their weekly slide after the Labor Department said the U.S. shed 524,000 jobs in December, 1,000 less than economists estimated in a Bloomberg survey. A private report from ADP Employer Services on Jan. 7 had showed payrolls shrank by 693,000 jobs, the most since records began in 2001.

“The good news is that it didn’t decline more or more rapidly,” said Franz Wenzel, Paris-based deputy director for investment strategy at Axa Investment Managers, which oversees $770 billion. “The ADP report earlier this week was fairly bad. Against that backdrop, this is OK. We shouldn’t be overly optimistic.”

Europe’s Dow Jones Stoxx 600 Index rose 0.9 percent to 210.64 at 2:05 p.m. in London after earlier falling as much as 0.6 percent.

Standard & Poor’s 500 Index futures added 0.3 percent, indicating the benchmark index for U.S. equities may trim this week’s 2.4 percent slide.

$1 Trillion

The MSCI World Index of 23 developed countries slumped 41 percent since the start of last year as $1 trillion in losses at financial companies eroded profits and the U.S., Europe and Japan fell into simultaneous recessions.

Economists had projected a decline of 525,000 U.S. jobs. December’s decrease brought last year’s payroll drop to 2.589 million, the most since 1945. The unemployment rate jumped to a 15-year high of 7.2 percent.

Daimler rose 3.7 percent to 28.16 euros. The world’s largest truckmaker makes 20 percent of its sales in the U.S.

Michelin advanced 3.1 percent to 39.41 euros. The second- biggest tiremaker makes 33 percent of its revenue in North America.

Obama’s $775 Billion

President-elect Barack Obama warned in a speech yesterday that the U.S. risks sinking deeper into an economic crisis without an infusion of government spending and urged Congress to act quickly on his $775 billion stimulus package.

Earnings at S&P 500 companies have fallen for five straight quarters, matching the longest streaks of declines on record, and the slump is forecast to continue. According to estimates compiled by Bloomberg, profits probably decreased 12 percent last quarter and will drop 11 percent in the first quarter and 6.2 percent in the following three months before rebounding in the second half of the year.

The S&P 500 has rebounded 21 percent from an 11-year low on Nov. 20 on optimism the recession will end this year after the Federal Reserve cut interest rates to as low as zero and Obama proposed the largest infrastructure investment since the 1950s.

The deepening economic contraction in the U.K. spurred the Bank of England yesterday to slash its benchmark interest rate to the lowest since the central bank was founded in 1694.

To contact the reporter on this story: Adria Cimino in Paris at acimino1@bloomberg.net.