* MSCI All Country World Index up 0.1%
* Mood lifted by increasing activity in Europe
* Trade thin with closed US markets
* Concerns remain about China’s crackdown on technology companies
* Dollar falls, under pressure from weaker US payroll
By Tom Arnold and Kevin Buckland
LONDON / TOKYO, July 5 (Reuters) – World stocks climbed close to record highs on Monday as concerns over the delta variant of COVID-19 offset positive sentiment from rising euro-zone business and a welcome US employment report.
The STOXX index of 600 leading European companies rose 0.2%, reversing previous losses after data showed that euro-zone companies expanded at the fastest pace in 15 years in June.
The activity of British service companies also increased strongly in June, albeit at a somewhat slower pace.
French stocks remained unchanged as Health Minister Olivier Veran warned France could be heading for a fourth wave of the pandemic due to the highly transferable Delta variant.
COVID-19 fears weighed on Japanese stocks, too – the Nikkei fell 0.6% to a two-week low just weeks before the Olympics started to rise in infections in Tokyo.
MSCI’s broadest index for Asia Pacific stocks outside of Japan was unchanged.
China’s blue-chip stock index bounced back from previous losses and rose 0.1% higher as Beijing’s pledges to continue political support for its tech sector helped ease concerns over crackdown on ride-hailing giant Didi Global and Counteract the review of other platform companies in the country.
The MSCI All Country World Index closed last week at a record 724.66 and was up 0.1% on Monday.
Trade was thinner than usual as U.S. markets closed over the long weekend of July 4th.
“Markets in general are still trying to gain a foothold,” said James Athey, investment director of Aberdeen Standard Investments.
“Stocks, of course, continue to shrug or ignore anything that might even remotely be considered negative as they continue their happy and complacent dance towards inevitable reckoning.”
S&P 500 futures signaled a flat open for Tuesday after closing 0.8% higher at a record high on Friday. The Dow Jones Industrial Average rose 0.4% and the Nasdaq Composite rose 0.8%. set another record.
U.S. non-farm payrolls rose more than an expected 850,000 jobs last month, data from Friday showed. But the unemployment rate unexpectedly rose from 5.8% to 5.9%, while the closely watched average hourly earnings, a measure of wage inflation, rose 0.3% in the past month, lower than the consensus forecast for an increase of 0.4%.
“Goldilocks pressure suggests there is no need to speed up the tapering schedule or the implied rate hike profile,” Tapas Strickland, an analyst with National Australia Bank, wrote in a client note.
“Overall, the workforce is still 6.8 million below the pre-February 2020 pandemic level and still below the level of significant progress the Fed needs. So there is nothing in this report that the Fed could be restrictive about. “
Eyes are on the minutes of last month’s Federal Reserve Open Market Committee meeting when policymakers surprised the markets by announcing two rate hikes by the end of 2023.
Comments from Fed officials have since been more balanced, particularly from Chairman Jerome Powell, as investors search Wednesday’s press release for further clues about the time of the tightening.
Eurozone government bond yields rose, but analysts expect the recent downward trend after US payrolls to resume.
The yield on ten-year German government bonds rose by one basis point to -0.222%.
The dollar fell after falling from a three-month high late last week under pressure from the weaker details of the US payroll.
It gained about 0.2% against the New Zealand dollar, which was trading at $ 0.7022, traded 0.2% lower at 110.82 yen, and fell 0.1% to $ 1.1876 per euro.
Gold rose 0.2% to $ 1,791.17 an ounce.
Crude oil rose as the OPEC + talks dragged on. Saudi Arabia’s Energy Minister pushed back on Sunday against opposition from another UAE Gulf producer to a proposed OPEC + deal, calling for “compromise and rationality” to reach an agreement when the group meets again on Monday.
Brent crude rose 0.4% to $ 76.46 a barrel and US crude rose 0.4% to $ 75.49 a barrel.
(Adaptation by Angus MacSwan and Mark Heinrich)