Rise in unemployment adds to poor sentiment

THE local sharemarket slipped into the red yesterday after a rise in unemployment put further pressure on investors who were already holding their breath before last night's European debt crisis summit.

THE local sharemarket slipped into the red yesterday after a rise in unemployment put further pressure on investors who were already holding their breath before last night's European debt crisis summit.

The benchmark S&P/ASX200 closed 11.8 points, or 0.27 per cent, lower at 4280.7, while the broader All Ordinaries was down 12.4 points, or 0.28 per cent, at 4338.9.

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 the Europe's crisis, fed through to employment.

"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 local bourse, with the sector losing 1.5 per cent in value.

Woodside Petroleum, the country's second-biggest oil and gas producer, dropped 2.3 per cent to $32.90 despite participants approving the first phase of its new $2.5 billion project on the North-West Shelf off Western Australia.

The positive news came after three land acquisition notices were ruled invalid by the West Australian Supreme Court. Oil and gas producer Santos lost 3.9 per cent to $13.

The financial sector lost 0.3 per cent after news two of the big-four banks, ANZ and NAB, had agreed to pass on the Reserve's rate cut in full.

ANZ lost 11?, or 0.52 per cent, to $21.13. NAB gained 21?, up 0.86 per cent, to $24.61.

Investors were biding their time ahead of the euro-zone leaders' debt summit last night.

But, with Germany and France forcing the other nations to adopt severe cuts in spending and tax increases, the drawn-out crisis has markets pushing for more rate cuts here.

"Markets are still very keen on another four (0.25 per cent) rate cuts by the middle of next year," Mr Workman said.

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