By Barbara Kollmeyer, MarketWatch
MADRID (MarketWatch) — European stock markets pared losses late in the trading session Friday, as disappointment over U.S. jobs data was tempered by a statement from Greece that “troika” talks concluded positively, sending shares in Athens soaring.
The Stoxx Europe 600 index trimmed its decline, but still closed down 0.4% at 273.67, weighed by losses in several heavyweight Nordic stocks.
Wall Street opened with a steep drop after jobs growth slowed sharply in May. Nonfarm payrolls rose a seasonally adjusted 54,000, the smallest gain since September and far below the 125,000 expected by economists polled by MarketWatch. Read more about U.S. jobs report.
Steen Jakobsen, chief economist at Saxo Bank, said the data confirmed a string of weak economic figures and surveys seen recently, not just in the U.S., but around the globe.
“This experiment of stimulus and the wealth effect is not working. There is a huge gap between Wall Street and Main Street,” he said.
Jakobsen predicts a 5% to 10% correction in the Standard & Poor’s 500 index /zigman2/quotes/210599714/realtime SPX +1.47% “before we see any new stimulus going ahead.” For Europe, he sees a similar correction.
“Generally speaking, Europe will follow through. World growth is coming down dramatically,” he said.
The other focus for Europe was Greece. The Greek ASE Composite index surged near the end of trading to close 4.4% higher after the Greek Finance Ministry said a review of its implementation of reforms by the European Union, European Central Bank and International Monetary Fund concluded “positively.” Read more about talks in Greece,
Those talks were related to the current €110 billion ($160 billion) rescue plan.
As markets closed, the EU, ECB and IMF issued their own statement, saying they had reached broad staff-level agreement with Greek authorities on necessary economic and financial policies.
Greek stocks had been rising throughout the day on speculation that progress would be made on further aid for the embattled euro-zone country.
Jakobsen said the market has had “so many false breakthroughs, it wants to see a plan implemented. It’s going to be a short-lived rally, if any, if the market knows Greece is on its way to being re-profiled inevitably. Getting new promises from Greece in terms of what they’ll do won’t help me as an investor. We’ve got worse and worse [global] data coming out. Greece on its own can’t help.”
In Athens, shares of Alpha Bank AE soared almost 13%, EFG Eurobank Ergasias SA rose 11% and National Bank of Greece SA rallied 7.8%.
Also higher, shares of Coca-Cola Hellenic Bottling Co. SA /zigman2/quotes/202706988/composite CCHBF +9.75% rose 2% after being upgraded to buy from hold at Citigroup.