European Crisis Live: US Jobs Report Punishes Stocks, Euro as Bonds Surge

155 BST: Heading to the exit

No, not Greece - your correspondent!

European stocks are just about to shut it down for the weekend, having failed to reverse the May trend of declines. The FTSE 100 did manage to claw back some of the afternoon's losses but still sits 1.2 percent down on the day at 5,257.4. The broader FTSE Eurofirst 300 will end 2 percent down at 952.83 while the DAX will lead decliners with a 3.4 percent drop to 6,050.94, as mentioned erasing gains for the full year.

The single currency was last seen trading at $1.2377 and the Pound was at a four-month low 1.5399 against the US dollar.

Have a great weekend!

1540 BST: Irish yes

Formal counting from Thursday's Irish referendum on the EU Fiscal Pact looks to show a lock "yes" vote as the final constituencies are counted. At this stage, acceptance of the treaty stands at 60.2 percent and Reuters is reporting that the remaining votes to be counted would not be large enough to overturn the margin of victory.

1530 BST: Four-Day dry

Interesting dimension to this afternoon's equity market decline here in the UK in that we're seeing an accelerated fall in the FTSE 250 (-1.8 percent) when compared to the more internationally-focused FTSE 100 (-1.2 percent). Given the dearth of good news across any of the three major economic regions today, you might assume the FTSE 100 would suffer steeper declines. But I wonder if the FTSE 250 is outpacing the losses as investors prepare for four days of illiquid markets owing to the two-day Jubilee celebrations next week? FTSE 100 bluechips have alternate trading destinations (ADRs, foreign listings, etc) while bread-and-butter FTSE 250 stocks are largely only domestically traded.

Either way, the four-day respite is going to be very difficult for UK-based investors to enjoy and next week's trading could incredibly volatile of the banking crisis in Span deepens and/or there's any noticeable gap in the polling data showing a Syriza lead going into the 17 June elections in Greece.

1500 BST: ECB rumour

Spanish and Italian government bond yields are improving this afternoon despite the overall "risk-averse" tone in the capital markets. This has prompted some suggestion in social media discussions that the European Central Bank may have reactivated its Securities Markets Programme (SMP). The SMP has been used by the ECB to stabilise prices in the region's government bond markets, but has been dormant for at least three months (after having purchased €212bn) as the ECB shifted its preference for support to the twin €1tn Long Term Repo Operations (LTRO).

When contacted by the IBTimes, an ECB spokesperson refused to engage the question of bond purchases (I don't blame her!) and referred me to the ECB's website, which publishes weekly updates of the SMP's activity.

So there!

1445 BST: US Stocks extending losses

The Dow drops more than 100 points at the bell and slides a further 50 to fall by 1.2 percent in early trading. Similar percentage declines for the S&P 500 and a larger 1.9 percent sag for the tech-heavy Nasdaq. As in Germany, the Dow has erased 2012 gains in the wake of the jobs data.

1410 BST: Germany erases 2012 gains

The benchmark DAX index has fallen to its lowest level of the year, ending its position as the only major European market to hold onto year-to-date gains amid the region's debt and banking crisis. Stocks in Germany have plunged more than 4 percent today with declines accelerated by the US jobs report.

1400 BST: Stocks pounded

Europe's stock markets are getting engulfed by the global risk pullback after a "perfect storm" Friday of poor economic data from China, Europe and the United States.

The FTSE Eurofirst 300 is down more than 2.3 percent (23 points) to 950.61. France's CAC-40 has fallen nearly 3 percent to a November low of 2,924.53 and the FTSE 100 has slid 1.7 percent to 5,231.21 (and would have fallen further but for the support of BP shares).

1345 BST: Blue crush

Stocks are getting clattered all over Europe (the only market open for trading) after that grim US Employment report (which showed the weakest gain in jobs since May 2011). The Euro has fallen more than a full percent against the US dollar in the wake of the figure, to 1.2288, and German 10-year yields are trading at an all-time low 1.129 percent.

US 10-year and 30-year yields are printing historic lows and gold has risen 1.3 percent to a session high $1583.49.

1337 BST: Terrible job news

In what could be a pivotal moment for both the US economic recovery the this fall's Presidential elections, the US Labor Department said that only 69,000 jobs were added in May, more than 80,000 less than the conservative estimates of Wall Street analysts. The unemployment rate rose to 8.2 percent.

>Private additions hit 82,000 while government jobs fell by 13,000

Average earnings ticked up by 0.1 percent while hours worked fell to 34.4 hours per week.

Bond markets have erupted and stocks around the world are being pressured to the downside. I'll come back and update on prices and yields when it calms.

1320 BST: Payrolls await

Not much to report as the world (so it seems, anyway) sits on its hands ahead of the US Employment Report. Thus far, the tone is very defensive: the MSCI World Index is down to a 2012 low of 2985.81

1120 BST: Picture this

A couple of "Twitpics" making the rounds this morning to help lighten the mood:

1. A spoiled ballot from Thursday's Irish referendum on the EU Fiscal Pact:

http://twitpic.com/9rjkab

2. A new addition to the Bloomberg suite of data on currency markets:

http://stock.ly/content/details/16768

1050 BST: Tsipras Talks

The leader of the anti-bailout Syriza party, Alexis Tsipras, is speaking to reporters in Athens as part of a presentation of the hard-left politician's economic strategy for Greece. He titles it "Opening the Road for Hope" and says the choice Greeks face is one of "Syriza" or "Bailout". He vows his party will nullify the previous agreement while making Greece an "equal member" of the Eurozone.

1020 BST: "QE" who?

Jubilee weekend is upon us and Her Royal Majesty Queen Elizabeth will be feted up and down the country in celebration of her 60 year reign. Bond traders, a notoriously pragmatic lot, are much more focused on the other "QE", the colloquial version of the Bank of England's £325bn asset purchase programme.

Given the dismal reading of manufacturing activity - and the likely 0.5 percent clip-off to Q2 GDP from Her Majesty's four-day Street Party - traders are placing huge bets on an increase to the BoE's balance sheet. Ten-year Gilt yields are now trading at an all-time low of 1.49 precent, a reflection of both the flight-to-safety trades taking place in Triple-A markets all over the world and the desire to get ahead of the wave of at least £25bn, and maybe £50bn of bond purchases by the BoE's trading desk.

1000 BST: Eurozone unemployment

Unemployment around the Eurozone hit 11 percent in April, according to Eurostat, bang in-line with economists' forecasts and the highest ever on record.

The single currency's plight in foreign exchange markets, however, continues to deteriorate and now trades at an 11.5 year low against the Japanese Yen (96.438) and a two year low against the US dollar ($1.2316)

0955 BST: Spanish insruance costs rise

Credit default swap prices for Spain have risen to a record high 605 basis points, meaning the cost of insuring the debt against default is now €605,000 a year.

Meanwhile, oddly, Spain's IBEX is the only major European market in positive territory for the session, now about 3.5 points to the upside to 6,091.9

0930 BST: UK Manufacturing collapse

Manufacturing PMI data for the British economy will make for grim reading in Downing Street this morning: The Markit PMI survey plunges to a three-year low 45.9 in May from revised 50.2 in April, the lowest in more than three years. New orders slumped to 42.0 from a revised 49.0 in April.

Sterling has fallen sharply following the release, hitting $1.5289 against the US dollar. The Euro is also improving against the Pound, hitting a one-week high of 80.765 pence.

0920 BST: Dutch ruling

A court in The Hague has rejected a legal challenge by Freedom Party Leader Geert Wilders to delay the Dutch parliament's vote to ratify participation in Europe's permanent bailout fund, the European Stability Mechanism (ESM). Wilders had argued that the vote should be held after a new government is formed following national elections in September.

0915 BST: Markets react

FTSE Eurofist 300 now extending losses, falling 0.4 percent to 969.21 after gloomy manufacturing and employment data around the Eurozone. Benchmark 10-year Bund yields continue their downward march, falling to 1.18 percent, as do 30-year yields, which hit 1.719 percent just a few moments ago. Bund futures have risen to a new all-time high of 146.27.

0910 BST: The Italian Job ...

.. seems a lot harder to get these days. Figures show Italy's unemployment rate rising to a record-high 10.2 percent in April from an upwardly-revised 10.1 percent in March (original reading was 9.8 percent). More than 28,000 jobs were lost in April, the country's national statistics office, ISTAT, said Friday.

More worryingly, youth unemployment remains above 35 percent after easing from a record-high 35.9 percent in March, although that's more likely to reflect a large "give-up" rate for younger Italians seeking new employment. In fact, Italy has one of the lowest labour market participation rates in the industrialized world.

0855 BST: German engine stalls

Germany rounds out the major European PMI readings with a 45.2 for March, the lowest in three years and more than a full point worse than the April tally.

UPDATE: The Eurozone PMI collecitvely comes in at 44.6 for May, down 0.1 percent from the flash estimate and two full points lower than the April reading of 46.1. New orders rise marginally from the first May reading to 42.6, but are down from April's 43.5 to a six-month low.

0850 BST: Italy improving; France not

Manufacturing PMI data from Italy surprises mildly to the upside, rising to 44.8 in May from April's 43.8. The new business component of the index also improves to 40.3 from 39.2 in April. Both figures, however, show 11 consecutive months of contraction.

In France, the May PMI figure falles to a three-year low 44.7 from April's 46.9 while new orders improve marginally to 40.3 from 39.2 in April.

0825 BST: Spain's pain

Manufacturing activity crawled to a near halt in May, according to the Markit Purchasing Managers' Index survery, which sank to 42.0 from 43.5 in April, the lowest level since 2009. Figures below 50 indicate contracting activity. The Index of new business activity was even worse, falling to 38.3 from 41.3 and contracting for the 13th consecutive month.

0820 BST: Negative yield

Germany's benchmark two-year Schatz, sold last week with a coupon of zero percent, is now trading with a "negative yield" on certain dealing platforms. Effectively this means investors are paying more than par value for the bonds, choosing capital protection over return. The flight-to-safety is defining bond trading all over the world this week as record and multi-decade low yields on benchmark debts were set throughout the entire week.

0805 BST: Mixed as expected

Europe's equity markets open with some indecision as the broader FTSE Eurofirst 300 adds 0.2 percent to 974.58 alongside similar gains for Britain's FTSE 100 and bourses in France, Spain and Italy. Germany's DAX is down about 0.1 percent.

0750 BST: Good Morning!

It's going to be hugely important trading session today as European investors continue to grapple with the ongoing sovereign debt crisis but also contend with the spillover from disappointing economic data from China and prepare for critical employment figures from the United States.

Asia shares kicked-off the month of June in the same fashion that defined most of the month on May: taking risk off the table and marking down share prices all over the region.

The MSCI Asia Pacific Index fell 0.9 percent to extend a May decline of 10 percent - the worst in at least three years - a global pullback in stocks that has cost global investors more than $4tn in equity value.

Industrial stocks led today's falls after official Chinese manufacturing data showed the weakest pace of activity since December of last year.

The US Labor Department will publish it monthly Employment Report at 1330 BST Friday as investors look for signs that the nascent recovery in the world's largest economy is gaining traction in the labor market. Analysts are expecting the addition of 150,000 onto US non-farm payrolls last month, although a private survey of job creation, published by the data firm ADP on Thursday, indicated a slowing in the pace of new job creation.

Here in Europe officials from both the EU and the European Central Bank are calling for Germany to drop its objections to centralized funding for the region's struggling banks as more pressure is applied to the borrowing costs of indebted Eurozone members France and Spain. Risk-averse investors continue to find safety in German and British government debt, as well as non-Euro currency areas such as Denmark and Switzerland.

Financial bookmakers are calling for a mixed series of opening prices for the region's major indices, but the downward pressure on Asia stocks suggests any gains will be difficult to maintain.

The single currency has been holding steady at a two-year low of 1.2359 against the US dollar while 30-year German bunds hit another all-time low yield of 1.74 percent in early bond market dealing.

Spain's benchmark 10-year government bonds are marked at 6.576 percent, around 2 basis points higher than last night's close.