European Stocks Downbeat; merchandise Weigh   by Zahid Hussain http://www.thenewsarena.com/

LONDON .European stock markets remained on the back foot Friday, weighed down by flaw in the oil and resources sectors as commodity prices slipped from recent highs. At the same time, there is also a point of nervousness ahead of the key U.S. employment release.

At 1117 GMT, the standard Stoxx Europe 600 index was 0.2% lower at 280.94. As far as the national indexes are worried, London’s FTSE 100 was downward 0.5% at 5986.12, the DAX index in Frankfurt was off 0.2% at 6968.88, and the CAC-40 in Paris declined 0.6% at 3880.48.

Fault in metals prices–spot gold has dropped around $13 from the levels seen late in New York to $1358.70 per troy ounce–and oil prices plummeting below $90 a barrel–the Nymex February crude oil futures contract traded last at $88.70 per barrel–have resulted in victims for oil majors and basic resources.

With the U.S. jobs data out at 1330 GMT, these are the sectors where investors are plummeting risk exposures, said City Index.

“The selloff could also be as much about income taking as reducing risk considering the very burly start to the year both sectors have had. The fact that both tobacco and pharmaceutical sectors are also heavily lower this morning insinuates that traders are not looking for defensive havens,” it added.

The Stoxx Europe 600 oil and gas sector traded 0.3% lower at 345.52, and the Stoxx Europe 600 basic resources sector was 0.9% lower at 631.94.

All eyes will shift to the discharge of the nonfarm payrolls figure, with the number previously expected to be up 150,000 in December, even though forecasts have been raised after the muscular ADP employment report.

What effect the result of the jobs data could have on the markets is a thorny one to call, said IG Index, but with December’s strong [equity] gains, “it may well be that positive jobs news is before now factored into the price, and so the short-term risk for markets could be for a additional correction.”

Ahead of the jobs report, the Dow Jones Industrial Average futures agreement for March delivery was losing 16 points at 11,630, and Standard & Poor’s 500 futures contract for the same month 2.2 points lower at 1268.

Earlier, economic data from the euro zone exposed gross domestic product in the third quarter was 0.3% higher than in the three months to June, and 1.9% higher than the analogous period of 2009. Separately, the joblessness rate in the region in November was stable at 10.1%, the highest since July 1998, in line with the market consensus estimate from a Dow Jones Newswires review of economists last week.

Elsewhere, German industrial production fell in November from the preceding month. Industrial output fell a seasonally attuned 0.7% in November from October, but rose by 11.1% on the year.
In Asia overnight, stock markets were mixed, with weakness in the property sector and concern ahead of the U.S. payrolls data weighing on some markets.
Japan’s Nikkei Stock Average clogged up 0.1%, Australia’s S&P/ASX 200 ended off 0.4% and South Korea’s Kospi Composite rose 0.4%. Hong Kong’s Hang Seng index was 0.3% inferior and China’s Shanghai Composite rose 0.5%.

In the European overseas exchanges, the euro continues to show weakness after falling to a four-month low beside the dollar at $1.2960 in the Asian session.

Resurgent fears about euro-zone debt infection, concerns about the political situation in Belgium, and worries as Portugal prepares to Dutch auction up to EUR1.25 billion in paper weigh on the single currency, Lloyds noted.

At 1130 GMT, the euro was trading on $1.2980, down from $1.3002 in late New York trade Thursday, whereas the dollar was at Y83.53, up from Y83.33.

Caution further on of the nonfarm payrolls release has limited activity in the core sovereign debt markets Friday, and the standard German bund contract for March delivery was down 0.14 at 125.59.

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