By Kimberly Vlach And Steve Goldstein
Jitters tempered European markets across the board Thursday as traders awaited a key U.S. employment report due out on Friday. Stocks, oil and gold traded in tight ranges.
Currency trading was more active with the pound and yen both slumping against the dollar. The Bank of England, as expected, kept short-term interest rates at 0.5% and maintained its asset purchase program at £200 billion ($320.44 billion). The pound, which slumped to fresh 2010 lows against the dollar ahead of the news, was trading late in Europe at $1.5914, down from $1.6005.
The yen sank to a four-month low against the dollar after Japan's new finance minister, Naoto Kan, said he wants to see the yen weaken a bit further. He even made the unusual step of naming the desirable dollar-yen level: ¥95. Late in Europe, the dollar was at ¥93.15 from ¥92.30, late Wednesday in New York.
Headlining Friday's economic calendar is the U.S. nonfarm payroll report for December. Consensus expectations anticipate a reading of zero job losses and some economists forecast job gains, something not seen since early 2008. U.S. weekly jobless claims released Thursday came in better-than-expected, stoking optimism about the December jobs report.
In early U.S. trading Thursday, stocks also were lower and shares in Asia closed modestly lower.
On Friday, ahead of the U.S. jobs news, the U.K. will release producer price index data for December. In the euro zone, unemployment data are due, along with a revision of third-quarter gross domestic product data. Wrapping up the day in the U.S., wholesale trade data and consumer credit figures will be released.
A strong employment report would boost confidence in the U.S. recovery, but it would also prompt investors to fret that the Federal Reserve will raise short-term interest rates sooner-than-expected. The Fed has maintained that it plans to keep short-term rates low for an extended period of time.
In stocks, the pan-European Stoxx 600 index added 0.12 points, closing at 258.08. The U.K.'s FTSE 100 index lost 0.1% to 5526.72 and Germany's DAX fell 0.2% to 6019.36. France's CAC-40 index rose 0.2% to 4024.80.
At the time of the European stock markets close, the euro was at $1.4315, from $1.4403. The dollar was at 1.0338 Swiss franc from 1.0280 franc.
Late in Europe, light, sweet crude for February delivery was down 46 cents, or 0.5%, at $82.72 on the New York Mercantile exchange.
Meanwhile, the front-month gold contract for February delivery on the Comex division of the New York Mercantile Exchange was down 0.6% at $1130.30 per troy ounce.
In major market action: Several media stocks were active after Goldman Sachs increased earnings per share estimates for many companies in the group. JCDecaux /zigman2/quotes/210449424/delayed FR:DEC +0.53% gained 9.1% iand Havas rose 6.2% on Euronext Paris as both French advertising firms were upped to "buy" from "neutral," while magazine and book publisher Lagardère /zigman2/quotes/206737784/delayed FR:MMB +0.26% dropped 2.2% after being downgraded to "sell" from "neutral."
The telecommunication sector struggled, with Vodafone Group /zigman2/quotes/202484985/delayed UK:VOD +0.29% falling 2.6% on the London Stock Exchange, Deutsche Telekom /zigman2/quotes/205973137/delayed DE:DTE -1.59% falling 1.9% on the Xetra trading system and France Télécom falling 1.3% in Euronext Paris.
"Normally in the first quarter of each year, telecom stocks have a bad quarter in terms of relative performance, everyone is looking for growth and moving into cyclical stocks, so more defensive stocks are suffering," said Andreas Mark, a portfolio manager at Union Investment in Frankfurt.
Praktiker fell 8.3% in Frankfurt as the German home improvement retailer said fourth-quarter comparable-store sales fell 11.4% after offering fewer discounts. The decline was particularly steep in Eastern European markets like Bulgaria, Hungary and Ukraine. J.P. Morgan cut its rating on Praktiker to "neutral" from "overweight," arguing that in Germany the company produced a "very weak performance" and that its Greek performance was troublesome.
Metro dropped 4% after the Praktiker figures as well as November sales data from Germany showing a 1.1% decline.
J Sainsbury /zigman2/quotes/206038250/delayed UK:SBRY -0.22% rose 3.2% in London after the U.K. supermarket chain said third-quarter comparable sales excluding fuel and value added tax rose 4.2%, beating the 3.5% increase expected by analysts.
Several U.S. retailers also reported same-store sales on Thursday. Costco Wholesale /zigman2/quotes/201191698/composite COST +0.65% , which operates 21 of its 153 international stores in the U.K., said 18-week comparable store sales rose 8% excluding gasoline price inflation and strengthening foreign currencies.
Sugar producer Tate & Lyle /zigman2/quotes/205109332/delayed UK:TATE +0.60% slumped 6.4% after it was cut to "neutral" from "outperform" by Credit Suisse, as it said annual sweetener pricing isn't going so well.
Continental /zigman2/quotes/202192628/delayed DE:CON -3.80% AG shares rallied 12.8% after announcing late Wednesday a plan to sell nearly 1.1 billion euros of discounted shares to reduce the tire maker's debt leverage.
"The size of the rights issue, the inflow of funds and Schaeffler [retaining] a 75.1% control position is in line with our expectations," said analysts from Oppenheimer who upped their rating to "buy" from "neutral."
Aer Lingus shares fell 2.3% as Ryanair Holdings said it wasn't planning a third bid to buy its fellow Irish carrier. Ryanair separately reported a 12% increase in December traffic and a plan to return cash to investors by March 2013. Ryanair shares fell 2% in London.
U.K. builder Persimmon /zigman2/quotes/206444744/delayed UK:PSN +0.68% rose 6.6% after saying forward sales are running about 40% ahead of last year. It also has been able to cut its debt from £1.2 billion in April 2008 to £270 million at the end of 2009.