Volkswacht Bodensee - Stock markets fall as traders trim US rate cut bets

An outsized US jobs report Friday dealt another blow to hopes for more interest rate cuts in 2025, and was followed by hefty losses on Wall Street.

In Asia on Monday, Hong Kong and Shanghai stocks fell but pared initial losses as data showed Chinese exports and imports topped forecasts in December.

Tokyo's stock market was closed for a holiday.

In Europe, London, Paris and Frankfurt also dropped.

Keenly awaited data showed the US economy created 256,000 jobs last month, a jump from November's revised 212,000 and smashing forecasts of 150,000-160,000.

"Given a resilient labour market, we now think the Fed cutting cycle is over," said Bank of America's Aditya Bhave and other economists.

It follows data last week that pointed to a rise in inflation expectations, and adds to concerns that president-elect Donald Trump's plans to slash taxes, regulations and immigration will reignite prices.

Surging oil prices added to unease, with both main contracts extending Friday's gains -- after the United States and Britain announced new sanctions against Russia's energy sector, including oil giant Gazprom Neft.

"The spike in oil prices could pose additional challenges for central banks, particularly the Federal Reserve, if it leads to higher inflation," said Patrick Munnelly, partner at broker Tickmill Group.

However, analysts do not expect prices to spike too much in the longer term as global oil production is expected to meet demand.

On currency markets, the pound was wallowing around lows not seen since the end of 2023 owing to fading hopes for US rate cuts as well as worries about the British economy.

The euro struggled at its weakest level since November 2022.

- Key figures around 1100 GMT -

London - FTSE 100: DOWN 0.3 percent at 8,224.15 points

Paris - CAC 40: DOWN 0.8 percent at 7,371.25

Frankfurt - DAX: DOWN 0.7 percent at 20,072.30

Hong Kong - Hang Seng Index: DOWN 1.0 percent at 18,874.14 (close)

Shanghai - Composite: DOWN 0.3 percent at 3,160.76 (close)

Tokyo - Nikkei 225: Closed for a holiday

New York - Dow: DOWN 1.6 percent at 41,938.45 (close)

Euro/dollar: DOWN at $1.0196 from $1.0244 on Friday

Pound/dollar: DOWN at $1.2126 from $1.2210

Dollar/yen: DOWN at 157.32 yen from 157.74 yen

Euro/pound: UP at 84.08 pence from 83.90 pence

Brent North Sea Crude: UP 1.5 percent at $80.92 per barrel

West Texas Intermediate: UP 1.7 percent at $77.86 per barrel

C.Kreuzer--VB