Services Sector Shows Mixed Signals From European Economies While Investors Await US Jobs Report

Europe ends this week with services sector's performance, where the sector witnessed improving conditions across the continent, except for Germany's that dropped beyond expectations but remained well above 50.0.

Starting with Germany, which is considered the largest economy in the Europe, the final August PMI Services reading dropped to 57.2, compared with the previous and the expected 58.5. Noting that a reading above 50.0 is still considered an expansion. The second largest economy in Europe, France, witnessed the opposite condition where the PMI Services index rose in the final reading for August to 60.4 compared with the previous and the expected 59.9.

Mixed signals about economic conditions in Europe have been emerging over the past period, causing volatility in trading. Investors are still cautious where uncertainty wrapped around the outlook of global economy spurred demand for safe haven and low yielding assets.

Moreover, the Euro-Zone reported a rise in activities in the sector reaching 55.9, higher the previous and the expected 55.6. The Euro-Zone advanced PMI Composite index in August also inclined, reaching 56.2, compared with the previous and the expected 56.1.

ECB Chairman; Juan-Claude Trichet, said yesterday during the press conference that following the rate decision, where the ECB preserved rates at 1.00 percent despite recent improvement in economic conditions, as the growth will remain moderate and at uneven pace as the economic outlook is still uncertain. Trichet expressed that inflation is at appropriate levels where monetary policy stance will be adjusted when needed, hinting for no change in interest rates over the short-term.

Meanwhile, UK's services sector slowed last month, where the index slumped to 51.3, compared with the previous 53.1 and the expected 52.9. Despite the setback in economic conditions, it is still above 50, which is the dividing line between expansion and contraction, but investors will feel bearish today as fear of outlook will intensify and help spur demand for safety while a slump in stocks and high yielding assets are highly projected.

Investors await the release of the US labor data that will be announced at 12:30 GMT, where expectations signal that the economy have lost nearly 105 thousand jobs during August, compared with the prior loss of 131 thousand jobs; unemployment is also projected to inch higher to 9.6 percent, from the previous 9.5 percent.

Challenges still persist in the continent where elevated unemployment, huge budget deficit, European debt problems and weak economic conditions continue to affect the ability of the economy to rebound and recover at a faster pace.

The Euro-Dollar pair is currently trading around the opening levels of 1.2828, while Gold is on the rise trading at 1252.00 an ounce, finally Crude for October settlement are currently trading at 74.57 a barrel.

Europe benchmark indices traded higher prior to US data release. FTSE 100 index gained 13.34 or 0.25%, reaching 5,384, CAC 40 index traded at 3,643 after rising 0.31 percent, DAX index traded at 6,103 after rising 0.29 percent.