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Stocks Down as Focus Turns to Payroll Figures

by Pan Pylas
Friday May 4, 2012

LONDON (AP) - Markets were on edge Friday after U.S. jobs figures pointed to a sluggish recovery in the world's largest economy and amid unease over how weekend elections in France and Greece will affect the way Europe deals with its debt problems.

Stocks were already down when the U.S. government published figures showing that the U.S. economy generated 115,000 jobs in April - below consensus forecasts for a 160,000 improvement.

Upward revisions to February and March and a surprise decline in the unemployment rate to 8.1 percent from 8.2 percent mitigated the impact of the April figure, though overall the data did added to the weight of evidence showing that the U.S. economic recovery has slowed from the levels being recorded at the back end of 2011.

Analysts said it's still possible that the U.S. Federal Reserve may enact another monetary stimulus. That prospect, though, will be dependent on the economic data, as Fed chief Ben Bernanke has stressed.

"Ignoring the specifics of today's report, the larger theme of slower job creation should now be embedded," said Dan Greenhaus, chief global strategist at BTIG.

For now though, the figures did little to alter the position in markets in the run-up to weekend elections in France and Greece that could have a big bearing on how Europe's debt crisis plays out over the coming months.

In Europe, the FTSE 100 index of leading British shares was down 1.4 percent at 5,686 while Germany's DAX fell 1.3 percent to 6,608. The CAC-40 in France was 1.4 percent lower at 3,178.

In the U.S., the Dow Jones industrial average was down 0.7 percent at 13,118 while the broader S&P 500 index fell 0.8 percent to 1,380.

The dollar was hardly affected by the payrolls news, and the euro was up a modest 0.1 percent at $1.3166.

Now that the payrolls figures have been released, investors will be focusing on weekend elections in France and Greece. In France, President Nicolas Sarkozy has for weeks looked like he would lose to his socialist rival Francois Hollande, but recent opinion polls suggest the election could be tighter than expected.

Though a change in leadership in Paris could prompt a change in the way Europe responds to the debt crisis that's already seen three countries bailed out, the elections in Greece have the potential to prompt far more volatility once markets reopen on Monday.

"Elections in France and Greece, plus a regional election in Germany, all have the potential to escalate the eurozone crisis by raising anxieties about fiscal discipline," said Chris Williamson, chief economist at financial information company Markit. "The elections are dominated by the growth-versus-austerity debate, especially in the face of recent survey data showing a deepening recession in the region

Opinion polls in Greece are banned in the run-up to elections so there's no real clear gauge as to the likely result. However, it does seem that Greek society is heavily divided and that the traditional parties of right and left will not get anything like the level of support they have been used to. New Democracy and PASOK are backing the terms of the most recent bailout, unlike many of the smaller parties that may well garner some support in Sunday's elections.

Earlier in Asia, Hong Kong's Hang Seng fell 0.8 percent to 21,086 and South Korea's Kospi lost 0.3 percent to 1,989.15.

However, mainland Chinese shares rose, with the benchmark Shanghai Composite Index up 0.5 percent at 2,452.01 and the Shenzhen Composite Index adding 1.1 percent to 972.30.

Oil prices drifted down below $100 a barrel amid the confirmation of the U.S. economic slowdown, with the benchmark New York rate down $2.55 at $99.99 a barrel.

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