FTSE 100 rises as US jobs data eases Fed rate hike fears

European stocks soared on Thursday as weaker than expected US jobs figures dampened market worries of a near-term interest rate hike across the pond. The FTSE 100 closed up 174.53 points, 1.7%, at 10,652.87. The FTSE 250 ended up 87.51 points, 0.4%, at 23,417.58, and the AIM All-Share rose 1.40 points, 0.2%, at 777.45. In European equity markets on Thursday, the Cac 40 in Paris ended up 1.7%, while the Dax 40 was up 2.2% in Frankfurt. In New York, the Dow Jones Industrial Average was up 0.7%, the S&P 500 eased 0.1%, and the Nasdaq Composite fell 0.8%. The gains in Europe came as a keenly awaited report showed the US labour market added markedly fewer jobs than expected last month, though the unemployment rate declined. “We’re in a ‘bad news is good news’ situation as weaker than expected US jobs data spurred a stock market rally,” said Dan Coatsworth, head of markets at AJ Bell. “Markets have interpreted the employment figures as making it less likely the Fed will raise interest rates,” he added. According to the Bureau of Labour Statistics, total non-farm payroll employment rose by 57,000 in June, from 129,000 in May, falling short of the FXStreet cited consensus, which had pencilled in a payrolls rise of 110,000. The May data saw a sharp downward revision from an initially reported 172,000. The April reading was revised down to 148,000 from a previously reported 179,000. The jobless rate eased to 4.2% in June, from 4.3% in May, where it had been expected to remain, according to FXStreet. Analysts at TD Economics noted market odds for a July US rate hike were “completely pushed back” following the release – a hike was 30% priced ahead of payrolls – with all eyes now turning to June’s consumer price inflation release, which is scheduled for July 14. “While a hotter reading could swing odds back in favour of a summer hike, we still think the bar for policy tightening is high,” the broker said. ING agreed and said the figures have “taken the wind out the sails for calls for imminent rate hikes. A soft July CPI report should boost the case for a prolonged Fed pause.” The US 10-year Treasury yield traded at 4.46% on Thursday, trimmed from 4.47% on Wednesday, and the US 30-year Treasury yield was flat at 4.97%. The pound traded at 1.3367 dollars on Thursday afternoon, up from 1.3273 on Wednesday. Against the euro, sterling firmed to 1.1681 euros from 1.1657 on Wednesday. Comments from Bank of England governor Andrew Bailey attracted attention. The BoE head insisted the UK central bank is “not complacent” about bringing down UK inflation following warnings from its chief economist.