MORNING REPORT
(7am AEDT)

US non-farm payrolls rose by 103,000 in September, above forecasts for a gain of around 60,000. And revisions led to employment numbers being lifted by 99,000 positions over July and August. The unemployment rate was unchanged at 9.1pct.

Fitch Ratings cut the credit ratings of Italy and Spain.

Germany and France have pledged ´´to do the necessary to secure the recapitalisation of our banks.´´

European shares hit 5-week highs on Friday, with investors encouraged by the latest US economic data. Shares in mining stocks performed strongly. The FTSEurofirst index rose by 0.7pct and it has recovered 9pct since setting lows on Tuesday. The German Dax rose by 0.5pct and the UK FTSE edged up 0.2pct.

US sharemarkets fell on Friday with investors choosing to book profits in late trade. Financial stocks were lower after Moody´s downgraded ratings at 12 UK financial institutions. The Dow Jones fell by 112 points in the last 30 minutes of trade to end lower by 20pts or 0.2pct. The S&P 500 was down by 0.8pct and the Nasdaq fell by 27pts or 1.1pct. Over the week the Dow rose by 1.7pct, the S&P 500 rose 2.1pct and the Nasdaq gained 2.7pct.

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US treasuries fell on Friday (yields higher) in response to better-than-expected jobs data. US 2yr yields rose by 2.5pts to 0.29pct and US 10yr yields rose by 9pts to 2.08pct. Over the week US 2yr yields were up 5pts while US 10yr yields rose by 15pts.

Major currencies swung higher and lower against the US dollar in volatile European and US sessions on Friday. The Euro rose from near US$1.3415 to US$1.3520 after the payrolls data but then fell to US$1.3365 before settling near US$1.3375. The Aussie dollar also rose from around US97.70c to US98.75c after the US jobs data before easing to US97.35c and then settling near US97.70c. And the Japanese yen traded between 76.55 yen per US dollar to JPY76.90, ending US trade near JPY76.70.

Global crude oil prices rose on Friday after better-than-expected US data boosted the outlook for the broader economy and oil demand. Nymex crude oil rose by US39c or 0.5pct to US$82.98 a barrel and London Brent crude rose by US15c to US$105.88 a barrel. Over the week Nymex oil rose by 4.7pct and Brent gained 3.0pct.

Base metal prices were mixed on Friday. Aluminium, lead and nickel were little changed but other metals posted gains of 2.0-3.6pct. Over the week metals rose between 3.3pct and 12.7pct, except lead, which fell by 3.0pct. The gold price fell on Friday as investors booked profits. The Comex December gold price fell by US$17.40 an ounce on Friday to US$1,635.80. But over the week the gold price rose by US$13.50 or 0.8pct.

Ahead: In Australia, no major economic data is scheduled. In the US, the Columbus Day holiday is observed. Government offices are closed but the sharemarket is open.

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