TSX headed for positive open as U.S. jobs growth beats expectations

The U.S. jobless rate improved by 0.2 percentage points to 8.5%.

The Canadian dollar moved off early lows following the release of the American employment report, off 0.02 of a cent at 98.11 cents US.

The loonie had been lower earlier in the morning after Statistics Canada said that Canada’s jobless rate edged up 0.1 percentage point to 7.5% last month even as the economy racked up modest job gains.

The agency reported that the economy created 17,500 jobs in December. The gain followed losses totalling 73,000 over the previous two months.

Expectations for U.S. employment growth picked up Thursday after private payrolls agency ADP said its own calculations for hiring gains were much stronger than forecast. ADP estimated that the U.S. private sector created 325,000 jobs in December. The Labour Department said Friday that the sector actually created 212,000 jobs last month.

U.S. futures moved higher following the data, with the Dow Jones industrial futures ahead 59 points to 12,390, the Nasdaq futures up 9.5 points at 2,349 and the S&P 500 futures picking up 6.1 points to 1,279.2.

Despite the optimism over the U.S. jobs report, worries about the Eurozone government debt crisis are never far away and Italy caught traders’ attention Friday.

The country’s benchmark 10-year bond yield edged further above seven per cent, a borrowing rate that is considered unsustainable.

North American markets closed little changed Thursday as traders worried about the health of European banks, which are hurting due to fears that they will take big losses on their holdings of government debt and will struggle to raise new cash to plug those holes.

Trading in UniCredit, Italy’s largest bank, was halted on Thursday after the stock lost a quarter of its value in two days. The bank said Wednesday it would need to offer huge discounts to investors to raise money in a new share sale. The stock was down another 11% on Friday.

Longer-term concerns about the euro and the region’s financial system pushed the common currency to 15-month lows of US$1.2775 on Thursday. It recovered slightly on Friday, rising to $1.2797.

Outside the eurozone, Hungary was sliding deeper into its own financial crisis. It had to pay a staggeringly high interest rate of 10% on its 12-month debt. That is far above the seven per cent level that forced Greece and Portugal to seek emergency bailouts to prevent them from defaulting on their debts.

Oil and gold prices gained ground following the release of the U.S. jobs data, with February crude on the New York Mercantile Exchange up 83 cents at US$102.64 a barrel.

The February bullion contract rose $4.50 to US$1,624.60 an ounce while March copper was unchanged at US$3.43 a pound.

Asian indexes ended mostly lower as they reacted to the previous day’s European market jitters. Japan’s Nikkei 225 Index closed 1.2% lower, Hong Kong’s Hang Seng index fell 1.2% and South Korea’s Kospi fell 1.1%.

In mainland China, the benchmark Shanghai Composite Index gained 0.7% while the smaller Shenzhen Composite Index gained 0.5%.

European markets also improved following the U.S. jobs report as London’s FTSE 100 index gained 0.71%, Frankfurt’s DAX was ahead 0.56% and the Paris CAC 40 gained 0.85%.

The Jean Coutu Group (TSX:PJC.A), Quebec’s largest drug store chain, reported net profits in its fiscal third quarter rose to $51.7 million or 23 cents a share. That compared with net earnings of $48.8 million or 21 cents a year ago. Revenue increased to $700.1 million from $681.1 million.