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European bourses mixed,

shrug aside US data

LONDON: European bourses were mixed at midsession on Tuesday after shrugging aside the strong U.S. jobs data that sent Wall Street lower on Monday, dealers said.

Data published on Friday, when most European markets were shut for the long Easter weekend, showed a rise of 140,000 in U.S. non-farm payrolls in March, double what had been expected. Wall Street fell 88.51 points to 5,594.37 as a result on Monday. The figures, along with February's revised increase of 624,000, indicated unexpected strength in the U.S. economy. That may mean U.S. interest rates will start rising again soon, which would make it harder for European states to cut rates.

But dealers said the jobs data may be giving a distorted view of the U.S. economy. Joe Rooney, an equity strategist with Lehman Brothers in London, said he still expected U.S. interest rates to come down later in the year.

"The strength in the U.S. economy is overstated. There looks to be a slowdown in the second half of 1996. Inflation remains quite benign," he said. Even if the fall in U.S. rates is over, there may still be scope for rates in Europe to come down, according to some analysts, pointing to continued weakness in European economies.

German data on Tuesday showed a one percent drop in industrial orders in February compared with January.

The Frankfurt bourse opened down but was up 7.38 points at 2,502.56 by midsession, helped by that industrial data and comments from Bundesbank president Hans Tietmeyer.

He said in a newspaper interview there was no reason at present to raise German interest rates and the Bundesbank was examining the scope for another small easing in German rates.

Separate data showed that British industrial output in February rose 0.4 percent, less than the 0.7 percent forecast, while manufacturing output -- excluding energy -- was flat.

"This should sustain expectations that there is still room for another reduction in interest rates as overall economic growth remains fairly soft," said Bank of America economist Rob Hayward.

The FTSE index of 100 top British shares was down 7.5 points at 3,748.1 after opening almost 30 points down at 3,726.5.

The CAC-40 index in Paris was down 3.68 points at 2,071.28 after opening at 2,063.53.

"As you can see, it's holding up remarkably well here. There's a real decoupling between Paris and the American markets today," one dealer said.

After U.S. jobs data was released last month showing a strong rise in employment in February, Wall Street plunged 171 points and the knock-on effect sent markets tumbling around the world

On the foreign exchange markets, the dollar this time shrugged off the slide in U.S. stock and bond prices and was helped by the German data. But it was having trouble moving beyond 108 yen.

"We still see the dollar testing the upside of its recent highs, but there is a steady stream of sellers at every major chart point so it's likely to remain range-bound for now," said Bank of Boston dealer Peter Wood.-Reuter