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World stocks up after US jobs data, stress tests

LONDON – World stocks rose Friday as a report revealed U.S. job losses slowed in April, stoking a growing belief that the recession in the world’s largest economy is starting to ease.

The Labor Department said employers cut 539,000 jobs last month, the fewest in six months and less than the 620,000 job losses analysts had been expecting.

However, the unemployment rate climbed to 8.9 percent from 8.5 percent in March as many businesses refrained from hiring amid an uncertain economic outlook.

Meanwhile, results from the U.S. government’s long-awaited bank “stress tests” proved to be roughly within expectations, lifting uncertainty over the market and also supporting equities.

In afternoon trading in Europe, Britain’s FTSE 100 was up 1.2 percent at 4,450.10, Germany’s DAX added 2.5 percent to 4,922.53, and France’s CAC 40 grew 2.1 percent to 3,320.15.

In morning trading in New York, the Dow Jones industrial average climbed 1.6 percent to 8,547.80 and the Standard & Poor’s 500 index rose 2 percent to 925.25, while shares in Asia had also risen earlier.

A two-month surge in global markets has gained pace over the last week as signs of a pulse in economies, industries and companies worldwide continue to feed hopes of a year-end recovery.

The U.S. April jobs survey — regarded by Wall Street as the most important economic indicator each month — was taken as further evidence of that rebound.

The report added to investors’ upbeat mood after the Obama administration’s tests of major banks showed nine of the 19 biggest lenders have enough capital to endure a deeper recession, but 10 must raise a total of $75 billion in new capital to withstand possible future losses.

The results, which analysts say showed the U.S. banking sector is vulnerable but viable, were largely in line with the trickle of reports leaked days before.

“The stress test results only indicated 10 needed money but no one is in such a bad state they face extreme difficulties,” said Stephen Pope, chief global markets strategist for Cantor Fitzgerald.

Financials gained on the news. Deutsche Bank and BNP Paribas both added 4.6 percent.

Shares in Royal Bank of Scotland Group jumped by as much as 15 percent after it reported a first quarter loss of 857 million pounds ($1.29 billion), which was not as bad as some investors feared. The bank made significant writeoffs and warned the next two years would be difficult, but still saw a jump in revenues.

The apparent frankness about the scale of the bank’s difficulties played well in the market, said Keith Bowman, analyst at Hargreaves Lansdown Stockbrokers.

“Trust is a big feature in the banking sector at the moment. Anything that reinforces trust is well received,” he said.

After initially rising nearly 4 percent, Germany’s Commerzbank AG fell 1.1 percent after it reported a first quarter loss of euro861 million ($991 million) as it made provisions for bad loans and investments. However, net interest income, one measure of revenue, was up 70 percent to euro1.7 billion from just over euro1 billion a year earlier.

In Japan, the benchmark Nikkei 225 stock average gained 47.13 points, or 0.5 percent, to 9,432.83, setting a fresh six-month high. Hong Kong’s Hang Seng closed up 171.98 points, or 1 percent, to 17389.87.

South Korea’s Kospi climbed 0.8 percent to 1,412.13, while Shanghai’s main index rose 1.1 percent and Australia’s index ended almost flat.

Among stocks, Toyota Motor finished down 1.5 percent before announcing its worst result ever. The world’s biggest carmaker said it lost a bigger-than-expected 436.94 billion yen ($4.4 billion) in the fiscal year and forecast more severe losses.

Oil prices rose Friday, with benchmark crude for June delivery up $1.32 to $58.03 in European trading. On Thursday, the contract rose as high as $58.57 a barrel, a six-month high, before settling up 32 cents at $56.47.

AP business writer Jeremiah Marquez in Hong Kong contributed to this report.

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