The recent surge of optimism fuelling equities hit a snag Thursday with the U.S. Labor Department reporting that jobless claims jumped by 15,000 to 413,000 in the week ended Saturday. Economists had expected a drop of 4,000, in line with five weeks of consecutive decreases.

This number flies in the face of the optimistic outlook for the near future presented yesterday in the Bank of Canada’s commentary and the U.S. Federal Reserve’s Beige Book.

Wall Street futures investors are reacting negatively to the news, foreshadowing a weak start to equities trading.

In a separate release, the U.S. Labor Department said that worker productivity was revised sharply higher for the second quarter, to an annual rate of 6.8% from the previously estimated 5.7%. This is a measure of non-farm worker output per hour worked, said Labor, and could mean firms will place less importance on cost-cutting, potentially clearing way for more hiring. But the increased efficiency of American workers may be their own undoing as a hazard to their own job security. Since the beginning of the year, American businesses have cut nearly half a million jobs.

In overseas economic news, the European Central Bank left its key refinancing rate unchanged at 2%. Earlier, the Bank of England held its key interest rate steady as expected at 3.5%.

In London at midday, the FTSE 100 is down 0.15%. Frankfurt’s DAX is up 0.06% and Paris’s CAC 40 is up 0.21%.


In Tokyo the Nikkei Stock Average fell slightly, down 68.74 points, or 0.64%, to 10,646.95. But in Hong Kong, share prices rose to a new 14-month high as investors snapped up blue chips. The Hang Seng Index rose 36.26 points, or 0.3%, to 11,138.62, its highest close since June 12, 2002.

On Wednesday, the S&P/TSX composite index gained 13.5 points at 7,580.36. Tech stocks were led by Nortel Networks. Canada’s biggest high-tech company announced a deal worth US$1 billion US with Verizon Wireless.

The TSX Venture Exchange closed up 6.97 points at 1,325.34.

The Dow Jones industrial average gained 45.19 to 9,568.46. The Nasdaq added 11.42 points to 1,852.90, a 17-month high. The S&P 500 index climbed 4.28 at 1,026.27.