Stocks in the US and Europe rallied yesterday, after a key report showed US employment rose last month at its fastest pace in almost four years, reassuring investors that the long-suffering job market has emerged from a long slump and the economic recovery is on track.
In London, the FTSE 100 rose by 1.2 per cent while in Dublin the market was up by more than 2 per cent.
In the US, Microsoft and General Electric were the biggest contributors to gains in the Standard & Poor's 500. Microsoft and rival Sun Microsystems were also among the Nasdaq's most actively traded stocks after they settled a long-standing legal battle over patents and unfair competition.
In its highly awaited jobs report, the Labour Department said non-farm payrolls added 308,000 jobs in March. The gain was the biggest since April 2000, and blew past Wall Street's expectation of 103,000 new jobs.
"This is a monster number," said Mr Frederic Dickson at fund firm D.A. Davidson & Co. "It is now very difficult to characterise the economy as 'no recovery'." US bond prices sank and the dollar shot higher in response to the jobs data.
Economists said the stronger-than-expected number suggested the Federal Reserve could raise overnight interest rates from historical lows sooner than many had expected.
In late afternoon trade, the Dow Jones Industrial Average climbed 73 points, or 0.70 per cent, to 10,446. The Standard & Poor's 500 Index added 7 points, or 0.62 per cent, to 1,139. The technology-led Nasdaq Composite Index gained 35 points, or 1.73 per cent, to 2,050.
The major indexes were on track for their biggest weekly gains since October, although they are still below two-year highs hit in the first two months of the year.
Employment services stocks such as Monster Worldwide and Robert Half International surged after the jobs report.
Monster shares jumped $2.38, or 9 per cent, to $28.67, while Robert Half rose $1.36, almost 6 per cent, to $25.29.
But financial, construction and home improvement stocks fell on fears that the spike in jobs will lead to higher interest rates, crimping the mortgage market.
In late afternoon trading on the Nasdaq, Microsoft shares rose 2.5 per cent, or 62 cents, to $25.70, while those of Sun shot up 17.66 per cent, or 74 cents, to $4.93 on news of their legal settlement.
Under the agreement between the two, Microsoft will pay Sun about $1.6 billion (€1.3 billion) to resolve the disputes. Sun, which has posted 11 straight quarters of declining revenues, also said it would slash its workforce by 3,300 jobs, or about 10 per cent, and forecast a quarterly loss, excluding charges, much wider than Wall Street estimates.
It is not yet clear if the job losses will affect Sun's European software development centre in Dublin, which employs 200 staff.
A spokeswoman for Sun Ireland said it was too early to tell what impact the announcement would have on the Republic. Staff would be informed if there was to be any changes, she added.
