U.S. jobs growth to send stocks higher

The report beat very modest expectations. Economists had looked for the economy to crank out about 55,000 jobs during September.

U.S. futures were higher with the Dow Jones industrial futures up 116 points to 11,162, the Nasdaq futures ahead 19.5 points to 2,224.2 and the S&P 500 futures gained 12.4 points to 1,170.

Meanwhile, the Canadian dollar moved higher Friday in the wake of a solid job creation report from Statistics Canada that blew past expectations. The dollar rose 0.75 of a cent to 97.11 cents US.

Statistics Canada reported that the Canadian economy created 61,000 net new jobs in September while the unemployment rate dropped 0.2 of a point to 7.1%.

In Canada, economists had reckoned that about 15,000 jobs would be created last month and the jobless rate remain unchanged. But a return to school added 38,800 jobs in the education sector.

“A quirk in the seasonal adjustment process has, for the past few years, shown big job losses at the end of the school year and then heavy rehiring when the new school year begins,” said CIBC World Markets chief economist Avery Shenfeld.

“In fact, private sector employment fell 15,000 in the month, although it is still up a healthy 2.2% from year ago.”

Beyond the U.S. figures, investors will continue to digest developments in Europe’s debt crisis amid another sign the banking sector faces renewed stress.

A dozen British banks have had their credit ratings downgraded by Moody’s Investors Services over doubts over the strength of the government’s support.

While the agency believes that the British government will continue to provide some support to systemically important financial institutions, it said it is more likely to allow smaller institutions to fail.

Moody’s insists that its downgrades have nothing to do with any worsening in the financial strength of the sector or over the state of the government’s public finances as economic growth stalls.

A near standstill in growth prompted the Bank of England yesterday to launch a 75 billion pound monetary stimulus.

Stock markets have risen sharply over the past couple of days amid mounting hopes that European policymakers are preparing a plan to shore up the banking sector in the event of a Greek debt default.

The European Central Bank offered new emergency loans to banks on Thursday to help steady them through the government debt crisis.

The ECB will offer an unlimited amount of 12-month and 13-month loans to banks. That will provide financing for a longer period and shield them from turbulence in borrowing markets.

But analysts observed that that the measures won’t keep banks from facing questions about solvency.

Commodity prices advanced following the release of the American jobs data with oil adding to two days of strong gains amid data showing an unexpected rise in U.S. inventories.

The November crude contract on the New York Mercantile Exchange rose $1.28 to US$83.87 a barrel after surging almost US$7 over the last two sessions.

Copper prices also rallied for a second day on signs of increased demand from China with the December contract up seven cents to US$3.32 after jumping 14 cents on Thursday.

And the December gold contract in New York gained $11.40 to US$1,664.60 an ounce.

Earlier in Asia, Japan’s Nikkei index rose one per cent after the country’s central bank said the economy is “picking up” and predicted an eventual return to a moderate recovery.

South Korea’s Kospi index jumped 2.9%, Hong Kong’s Hang Seng ended 3.1% higher while markets in mainland China were closed for a weeklong holiday.

European markets were positive with London’s FTSE 100 index up 0.12%, Frankfurt’s DAX edged 0.078% higher and the Paris CAC 40 was ahead 1.32%.

In corporate news, energy producer Enbridge Inc. (TSX:ENB) has agreed to become a majority owner of the Cabin Gas Plant in British Columbia for $250 million. The Calgary-based energy producer said it would pick up a 57.6% stake from Encana Corp. (TSX:ECA) and other co-owners of the property.