European stocks close higher as weak US jobs data points to potential Fed rate cut

European stocks closed higher Friday as disappointing U.S. nonfarm payroll figures boosted speculation of an interest rate cut from the Federal Reserve.

The pan-European Stoxx 600 closed provisionally up almost 0.9%, technology stocks leading gains with a near 2% rise as all sectors were in positive territory.

European Markets: FTSE, GDAXI, FCHI, IBEX

The U.S. Labor Department reported that job creation decelerated strongly in May, with nonfarm payrolls up by just 75,000. The decline was the second time in four months that payrolls increased by less than 100,000 as the U.S. labor market continues to paint a picture of economic slowdown.

Economists polled by Reuters had forecast that the U.S. would add 180,000 jobs during the course of May, and the weakness of the data could impact the U.S. Federal Reserve’s current thinking surrounding interest rates.

Wall Street investors took the negative data in their stride Friday, with traders hopeful it could pave the way for looser monetary policy from the U.S. central bank. The Dow Jones Industrial Average rose more than 270 points, while the S&P 500 and Nasdaq indexes were also in positive territory.

Another central bank that remained in focus was the European Central Bank. On Thursday, the ECB decided that it would postpone its first post-crisis interest rate hike, while raising its inflation forecast.

Both central banks have had to take a more dovish tone as global economic indicators point to sluggish growth and trade tensions between the U.S. and other partners including China and Mexico dampen business sentiment.

In terms of global trade developments, officials from the U.S. and Mexico continued talks on Friday, while at the St Petersburg International Economic Forum, Russian President Vladimir Putin criticized Washington’s treatment of Chinese telecommunications giant Huawei. Chinese President Xi Jinping, meanwhile, said the U.S.-China trade war wouldn’t disrupt the trend toward globalization.

Back in Europe, British Prime Minister Theresa May officially resigned as leader of the U.K.’s Conservative Party, however she will maintain her position as Prime Minister until a political heir is found.

In terms of individual stocks, Danish biotech giant Novozymes plunged nearly 7% after it downgraded its outlook, while shares of Dutch insurer ASR Nederland climbed to the top of the Stoxx 600 with a more than 6% rise.