Higher jobless figures rattle investors

THE sharemarket closed in the red yesterday after a rise in unemployment put further pressure on investors already holding their breath before last night's euro zone debt crisis summit.

THE sharemarket closed in the red yesterday after a rise in unemployment put further pressure on investors already holding their breath before last night's euro zone debt crisis summit.

The benchmark S&P/ASX 200 Index lost ground, dropping 11.8 points, or 0.27 per cent, to 4280.7.

A loss of 40,000 full-time jobs in November pushed the local unemployment rate to 5.3 per cent, up from 5.2 per cent in October.

Economists said the job losses were in line with Reserve Bank and Treasury forecasts, as hiring intentions, restrained by Europe's political crisis, fed through to employment. Part-time employment rose by 33,600.

"There's been a phenomenal shift over the last year towards lower levels of jobs and labour force growth," Commonwealth Bank senior economist Michael Workman said.

"It confirms that the employment market has been significantly softer over the last four to five months than it was at the start of the year, and the end of last year.

"It implies that the unemployment rate is going to drift a little bit higher over the next few months."

Energy stocks weighed heavily on the market, with the sector losing 1.5 per cent. Woodside Petroleum, the country's second-biggest oil and gas producer, dropped 76?, or 2.3 per cent, to $32.90, despite approving development of a $2.5 billion project off north-western Australia.

The positive news came after three land acquisition notices were declared invalid by the WA Supreme Court.

Oil and gas producer Santos lost 52?, or 3.9 per cent, to $13.

The financial sector lost 0.3 per cent after news that two of the big four banks ANZ and NAB had agreed to pass on the Reserve Bank's interest rate cut in full. NAB gained 21?, up 0.9 per cent, to $24.61. ANZ lost 11?, or 0.5 per cent, to $21.13.

The healthcare sector fell 0.9 per cent.

Investors were biding their time before the euro zone leaders' summit last night our time for signs the region's debilitating debt crisis will be resolved. But with the region's two major economies Germany and France forcing the others to subject themselves to severe cutbacks in spending and tax rises, the predicted drawn-out crisis has markets pushing for more rate cuts.

"Markets are still very keen on another four (25-basis-point) rate cuts by the middle of next year," Mr Workman said.

Market turnover was 2.49 billion shares worth $4.39 billion.

The price of gold in Sydney closed at $US1737.47 an ounce, up $US8.84.

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