Global stocks, U.S. bonds down after U.S. private jobs report

Reuters
Traders work on the floor of the New York Stock Exchange February 4, 2014. REUTERS/Brendan McDermid
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Traders work on the floor of the New York Stock Exchange February 4, 2014. REUTERS/Brendan McDermid

By Caroline Valetkevitch

NEW YORK (Reuters) - Global equity markets dipped on Wednesday after a weaker-than-expected U.S. private jobs report, while U.S. Treasuries prices fell.

Wall Street stocks opened down, with the Nasdaq falling more than 1 percent in early trading after the employment data, which precedes Friday's highly anticipated U.S. Labor Department monthly payrolls report.

Offsetting the labor data, two separate private surveys showed an uptick in growth in January.

The Institute for Supply Management showed that growth picked up in the dominant U.S. service sector in January, with steady strength in private-sector hiring, while Markit's report on service-sector activity showed growth quickened to a four-month high in January and hiring remained robust.

Markets have been volatile in recent weeks on concerns about demand and turmoil in emerging market currencies.

Calmer markets in vulnerable emerging nations like Turkey, South Africa and Russia helped to offset some of the market jitters, along with Markit's euro zone Composite PMI, which showed the 18-member bloc's recovery becoming increasingly broad-based.

The Dow Jones industrial average was down 56.93 points, or 0.37 percent, at 15,388.31. The Standard & Poor's 500 Index was down 13.10 points, or 0.75 percent, at 1,742.10. The Nasdaq Composite Index was down 51.06 points, or 1.27 percent, at 3,980.46.

A global equity index was down 0.2 percent, while an index of European shares was flat. MSCI's emerging markets index was down just 0.2 percent.

"It will be a buying opportunity when investors feel comfortable this rout we're in is over," said Paul Mendelsohn, chief investment strategist at Windham Financial Services in Charlotte, Vermont. "I don't think they want to step in front of it just yet until they have a feeling of where the bottom is going to be. We're not there yet."

Benchmark 10-year Treasuries yields have fallen below 2.65 percent, from more than 3 percent at the beginning of the year as investors flee emerging market assets and stocks tumble, increasing the safety demand for U.S. government debt.

"I think that most participants are looking for a stronger (U.S. jobs) number, mainly so they can buy at higher yields," said Thomas di Galoma, co-head of fixed-income rates at ED&F Man Capital in New York. "People are buying duration, buying out the curve because they aren't getting the selloff they anticipated."

Benchmark U.S. 10-year Treasury notes were down 6/32 in price with a yield of 2.657 percent, up about 2 basis points from late on Tuesday.

U.S. private employers added 175,000 jobs in January, just shy of analysts' expectations, the ADP National Employment Report showed on Wednesday.

Economists surveyed by Reuters had forecast the ADP National Employment Report would show a gain of 180,000 jobs, near the 185,000 jobs that Friday's non-farm payrolls report is expected to show employers added in January.

Weakening economic data has increased views that the Federal Reserve may ease reductions in its bond purchase program if the economy worsens, though many market participants say the data needs to change considerably from current levels to alter the Fed's plans.

In the foreign exchange market, a dollar index briefly rose to session highs after a report from the Institute for Supply Management showed slightly stronger-than-expected growth in U.S. services industries in January.

The dollar index, which measures the greenback against a basket of major currencies, touched a session high of 81.240 before slipping back into negative territory at 81.002, down 0.015 percent on the day.

GOLD, OIL PRICES FIRM

Spot gold rose as much as 1.5 percent to a session high of $1,273.26 an ounce after the ADP data, before cutting gains. It was last up 0.2 percent.

Oil prices were flat despite a U.S. industry report showing lower inventories and robust heating fuel demand due to cold weather in the United States.

The American Petroleum Institute's report on Tuesday showed crude stocks at the Cushing, Oklahoma, hub fell by 1.6 million barrels last week and distillates by 1.5 million barrels. Distillates include heating oil.

Brent crude was off 12 cents at $105.67 and U.S. crude slipped 10 cents to $97.09.

(Additional reporting by Karen Brettell in New York, Marc Jones and Anirban Nag in London, Blaise Robinson in Paris and Wayne Cole in Sydney; Editing by Catherine Evans and Dan Grebler)

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