Europe Shares Close Lower As US Unemployment Soars

U.S. employers slashed payrolls by 524,000 in December, driving the unemployment rate to its highest level in almost 16 years.

European shares closed lower on Friday, after U.S. jobless figures soared, and energy producers fell as crude prices slumped.

The FTSEurofirst 300 index of top European shares fell 0.3 percent to close unofficially at 867.95 points. In the first full week of trading in 2009, it rose 1.3 percent.

U.S. employers slashed payrolls by 524,000 in December, driving the unemployment rate to its highest level in almost 16 years, a government report showed, suggesting that the year-long recession was deepening. The figures were better than some forecasts, causing shares to rise initially.

"This is considerably better than the 750,000 we were forecasting," said Rob Carnell, chief international economist at ING. However, he pointed to revisions upwards for previous months.

Oil companies took most points off the index, as crude prices fell back 4 percent to below $40 a barrel, partly on worries about economic weakness following the labour data.

Total, ENI, BP and Royal Dutch Shell all fell between 1.7 and 2.9 percent.

Across Europe, Britain's FTSE 100, Germany's DAX and France's CAC-40 closed between 0.5 and 1.7 percent lower.

Banks declined, with Commerzbank down 11.5 percent, as investors digested the high price, now including part nationalisation, that Germany's second-biggest lender was paying to buy rival Dresdner Bank.