Surprise Jobs Data Sends World Markets Surging

European stock markets extended gains Friday amid expectations of an opening jump on Wall Street after stronger than expected U.S. jobs data stoked hopes the world’s largest economy may emerge from recession earlier than anticipated.

Figures from the Labor Department showed that the U.S. shed only 345,000 jobs in May. That was the fewest since September and well below market expectations for another 500,000 plus rise.

“The sharper than expected moderation in the rate of net payroll job losses suggests that the U.S. economy is perhaps closer to an actual recovery than previously thought,” said Paul Ashworth, senior U.S. economist at Capital Economics.

“If the rate of improvement continues, output should begin to expand again in the second half of the year,” he added.

Following the data, Wall Street futures jumped sharply with Dow futures up 107 points, or 1.2 percent, at 8,837 and the broader Standard & Poor’s 500 futures rose 12.70 points, or 1.4 percent, at 953.20.

The expected solid gains enticed more buying in Europe. Germany’s DAX was up 83.27 points, or 1.6 percent, at 5,148.07 while France’s CAC-40 index rose 72.39 points, or 2.2 percent, to 3,384.42.

Britain’s FTSE 100 index was the big gainer in Europe, rising 86.33 points, or 2 percent, to 4,473.27 with miners in big demand after Rio Tinto PLC scrapped its $19.5 billion deal with China’s Chinalco and opted instead to raise $15.2 billion in a share sale and set up a joint venture with rival BHP Billiton.

The gains in Britain came despite mounting uncertainty surrounding the future of Prime Minister Gordon Brown another resignation from his Cabinet. James Purnell, who quit his position as works and pensions minister, called on Brown to quit to save the party from a mauling at the next general election.

So far, Brown has held firm and is currently attempting a restructuring of his government. Alistair Darling, the finance minister, has kept his job despite speculation earlier in the week that Brown wanted him out.

“In the financial markets, equities and the pound have greeted the political turbulence with equanimity — so far,” said Neil Mackinnon, chief economist at ECU Group.

Earlier in Asia, Japan’s Nikkei 225 stock average rose 99.05 points, or 1 percent, to an eight-month high of 9,768.01 while Hong Kong’s benchmark Hang Seng closed up 1 percent to 18,679.53 in seesaw trade.

South Korea’s Kospi took back its losses to add 1.2 percent to 1,394.71 but Shanghai’s benchmark edged down 0.5 percent. In Australia, the main index advanced 0.9 percent.

Oil prices rose above $70 a barrel level, then eased, trading up 77 cents on the day at $69.58 a barrel. On Thursday the contract shot up $2.69.

The dollar gained to 96.95 yen from 96.63 yen, while the euro fell to $1.41 from $1.4190.

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AP Business Writer Jeremiah Marquez in Hong Kong contributed to this report.

6/5/2009 9:14 AM PAN PYLAS AP Business Writer LONDON