* Dollar up slightly, poised for fourth week of losses
* U.S. payrolls ahead of estimates, hourly earnings fall
* No "Trump fatigue" in investment flows: BAML
* China unexpectedly tightens policy
* Broadly healthier corporate earnings help stocks
By Vikram Subhedar
LONDON, Feb 3 The dollar headed for its fourth
straight weekly loss as stocks rose after better-than-expected
U.S. payrolls data masked underlying weakness in wage growth
that may keep the Federal Reserve from raising interest rates
Futures on Wall Street rose 0.5 percent to
session highs while European stocks extended earlier
gains and were trading up 0.8 percent.
Earlier in the day, an unexpected tightening of policy by
China's central bank put Asian markets, already on the back foot
on growing concerns about U.S. President Donald Trump's
aggressive policies, under further pressure.
Nonfarm payrolls increased by 227,000 jobs last month, the
largest gain in four months, the U.S. Labor Department said on
Friday. But the unemployment rate rose one-tenth of a percentage
point to 4.8 percent and wages increased modestly, suggesting
that there was still some slack in the labor market.
The focus now shifts to next week's U.S. Federal Reserve
"Continued strong job creation is tempered by the renewed
sluggishness in wage growth, raising questions once again about
the extent to which the functioning of the labor market has
evolved. The sluggish wage growth will make the Fed more
cautious about hiking in March," said Mohamed El-Erian, chief
economic adviser at Allianz.
The dollar pared some of its earlier gains against a basket
of six major currencies, with the dollar index up 0.1
percent and below the 100 mark.
FED DECISION NEARS
"The next hurdle for the USD to overcome is the Fed,"
analysts at Morgan Stanley, led by strategist Hans Redekker,
said in a note to clients, adding, however, that conditions for
a resumption of the dollar to resume its rally have improved.
Reiterations of continued loose monetary policy in Europe,
the Bank of Japan's commitment to control the JGB yield curve
and weaker yuan fixings by the People's Bank of China are "three
pluses" for the U.S. dollar, Morgan Stanley said.
Also, in FX markets sterling steadied after its worst
fall since October, while the euro was set for its sixth
week of gains in seven, at $1.0745 and having gone as high as
$1.0829 after the latest signs that growth and inflation are
rising in the euro zone.
The rally in risk assets following the U.S. presidential
election has faded in recent weeks in what Bank of
America-Merrill Lynch (BAML) called "Trump fatigue". However,
the broker noted that fund flows continued to point to broadly
Gauges of market volatility, such as the VIX, point
to little concern over risks arising from Trump's approach to
foreign and trade policy and investors pumped more money into
equities, company debt and emerging markets over the past week,
BAML said, citing data from fund tracker EPFR.
"(The) VIX in DC higher than VIX on Wall St," analysts at
BAML wrote in a note.
Oil prices edged up after U.S. threats of new sanctions
against Iran. Comments by Russian Energy Minister Alexander
Novak that oil producers have cut their output in accordance
with a pact agreed in December also helped to support prices.
Brent crude futures were up 21 cents, or 0.4
percent, to $56.76 a barrel. Brent is set to gain more than 2
percent for the week.
Front-month U.S. West Texas Intermediate crude futures
climbed 15 cents, or 0.3 percent, to $53.69 a barrel.
London copper fell, however, after China's
tightening of policy spooked metals markets.
(Additional reporting by the Americas markets desk; Editing by