The European markets rose on Friday, as banking stocks rallied after the U.S. government's stress test results showed large banks don't need as much capital as some had feared and heavily weighted energy stocks advanced after crude oil prices climbed.
U.S. bank regulators said Thursday that 10 of the 19 banks tested need to raise a total of $74.6 billion. The results released today should provide considerable comfort to investors and the public, U.S. Federal Reserve Chairman Ben Bernanke said in a statement.
The U.S. Labor Department said Friday that non-farm payroll employment fell by 539,000 jobs in April following a revised decrease of 699,000 jobs in March. Economists had expected a decrease of about 600,000 jobs compared to the decrease of 663,000 originally reported for the previous month. At the same time, the report showed that the unemployment rate rose to 8.9% in April from 8.5% in March. The increase, which lifted the unemployment rate to a new 25-year high, came in line with economist estimates.
Crude for June delivery rose $1.04 to $57.75 a barrel on the New York Mercantile Exchange, by the time the European markets closed, on better-than-expected U.S. jobs data and overly optimistic expectations about the U.S.'s appetite for energy.
The FTSEurofirst 300 index of pan-European blue chips closed 1.71% higher at 865.89 points, while the narrower DJ Stoxx 50 index rose 1.68% to 2,110.29 points.
Around Europe, the U.K.'s FTSE 100 index rose 1.44% to 4,462.09, while France's CAC 40 index surged up 1.88% to 3,312.59 and Germany's DAX index climbed 2.29% to 4,913.90.
Banks were among the top gainers. HSBC, Europe's largest bank, surged up 4.1%, while deutsche Bank, Germany's largest, climbed 4.7% and BNP Paribas, France's biggest lender, rose 1.9%.
Spain's Banco Santander added 4.7%, while Swiss bank Credit Suisse jumped 6.4% and Italy's UniCredit climbed 8.9%.
Royal Bank of Scotland, Britain's second largest bank, soared 13.9% after the company reported a small first quarter loss, as strong growth at its investment banking arm mitigated the impact of impairment losses and credit market writedowns.
Swiss Re, the world's second biggest reinsurer, rallied 17.8% after Bank of America upgraded the stock to buy from neutral.
Oil stocks gained, tracking firmer crude oil prices. BP, Europe's biggest oil company, surged up 2.2%, while Royal/Dutch Shell, the second biggest, climbed 2.4% and Total, the third biggest, rose 2.3%.
Luxottica Group, the world's biggest eyewear maker, jumped 10% after the company reported first quarter profit that fell 23% from last year but beat analysts' estimate.
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