European Markets Dropped On Japanese Weakness

(RTTNews) - The European markets got off to a weak start Friday, due to the sharp declines in most of the Asian markets. Japan's Nikkei index tumbled 3.55 percent to a one-month low after the Bank of Japan's latest Tankan business sentiment survey showed conditions and the outlook among large manufacturers worsened in March.

Weakness in commodity prices also weighed on the markets at the end of the trading week. Energy and mining stocks were under pressure as crude oil and gold prices turned lower. The highly anticipated U.S. jobs report came in with mixed results today, which also contributed to the negative mood.

The European markets began to pare their losses in late trade, as markets in the U.S. staged a recovery. The turnaround was triggered by the release of the better than expected ISM manufacturing report.

While employment in the U.S. increased by slightly more than expected in the month of March, a report released by the Labor Department on Friday also showed an uptick in the unemployment rate as more people entered the workforce.

The report said non-farm payroll employment climbed by 215,000 jobs in March after jumping by an upwardly revised 245,000 in February. Economists had expected an increase of about 210,000 jobs compared to the addition of 242,000 jobs originally reported for the previous month.

As mentioned above, the Labor Department also said the unemployment rate inched up to 5.0 percent in March from 4.9 percent in February. The unemployment rate had been expected to remain unchanged.

After reporting contractions in U.S. manufacturing activity for five straight months, the Institute for Supply Management released a report on Friday showing that activity in the sector expanded at a faster than expected rate in March.

The ISM said its purchasing managers index climbed to 51.8 in March from 49.5 in February, with a reading above 50 indicating growth in the manufacturing sector. Economists had expected the index to inch up to 50.5.

The Euro Stoxx 50 index of eurozone bluechip stocks decreased 1.72 percent, while the Stoxx Europe 50 index, which includes some major U.K. companies, lost 1.72 percent.

The DAX of Germany dropped 1.71 percent and the CAC 40 of France fell 1.43 percent. The FTSE 100 of the U.K. declined 0.47 percent and the SMI of Switzerland finished lower by 1.53 percent.

In Frankfurt, ThyssenKrupp jumped 4.98 percent. German business paper Rheinische Post reported that India's Tata Steel was in talks to take a stake in ThyssenKrupp's European steel unit.

Volkswagen lost 3.62 percent after saying it would recall 3,877 diesel Vento models from India. Rivals BMW and Daimler fell 3.37 percent and 2.33 percent.

In Paris, Airbus Group tumbled 2.35 percent after German newspaper Bild reported that engine problems will delay the deliveries of its A400M aircraft.

Peugeot fell 3.32 percent and Renault decreased 2.38 percent. Car parts maker Valeo also lost 2.08 percent.

Technip weakened by 2.21 percent and Total finished lower by 3.18 percent.

In London, J. Sainsbury rose 0.11 percent after the board of Home Retail formally recommended a takeover offer from the British supermarket group.

Mining stocks were under pressure due to weakness in commodity prices. Glencore sank 4.80 percent and Anglo American dropped 2.48 percent. Antofagasta weakened by 3.30 percent and Fresnillo surrendered 2.94 percent.

Novartis declined 1.72 percent in Zurich. UBS downgraded its rating on the stock to "Neutral" from "Buy."

Banco Santander is reportedly planning to close 13 percent of its 3467 branches in Spain that comes to around 450 branches. The stock fell 2.04 percent in Madrid.

Eurozone manufacturing growth improved more than initially estimated in March, final data from Markit showed Friday. The factory Purchasing Managers' Index rose to 51.6 in March from 51.2 in February and above the flash score of 51.4.

British manufacturing growth improved less-than-expected in March, though slightly, survey figures from Markit Economic showed Friday. The Markit/Chartered Institute of Procurement & Supply Purchasing Managers' Index for manufacturing rose to 51.0 in March from February's 34-month low of 50.8. Economists had expected the index to climb to 51.2.

U.K. house price growth accelerated more than expected in March, data from the Nationwide Building Society showed Friday. House prices climbed 5.7 percent year-on-year in March, faster than February's 4.8 percent growth and the expected rise of 5.1 percent. This was the fastest growth since January 2015, when prices climbed 6.8 percent.

China's manufacturing activity contracted at the slowest pace in 13 months in March, as the benefits of the stimulus measures adopted by the government has started to penetrate into the economy.

The Caixin manufacturing Purchasing Managers' Index rose to 49.7 in March from 48.0 in February, a survey published by Markit Economics showed Friday. Although a reading below 50 signals contraction, this was the highest score in 13 months and showed only a fractional deterioration. It was also above the expected score of 48.3.

Primarily reflecting a steep drop in spending on public construction, the Commerce Department released a report on Friday showing an unexpected decrease in total U.S. construction spending in the month of February.

The report said construction spending fell 0.5 percent to an annual rate of $1.144 trillion in February after jumping 2.1 percent to a revised $1.150 trillion in January. The pullback came as a surprise to economists, who had expected construction spending to inch up by about 0.2 percent.