* US NFP data underwhelms as jobs growth falls sharply
* Stocks, dollar resume weakness
* Oil gives up almost all earlier gains
* Risk-off sentiment over week sees big bond fund inflows
By Vikram Subhedar
LONDON, April 7 Surprisingly weak U.S. jobs data
soured sentiment for risky assets on Friday and oil prices
retreated from the one-month highs hit earlier in the day as
risk of escalating U.S. military action in Syria ebbed.
U.S. employers added the fewest number of workers in 10
months in March, but a drop in the unemployment rate to a near
10-year low of 4.5 percent pointed to a labor market that
continues to tighten.
Stocks and the dollar, which were trading flat before the
data, slipped. S&P 500 futures fell about 0.3 percent while the
dollar weakened against the yen and the euro
The probability of the U.S. Federal Reserve hiking rates in
its June meeting, which was as high as 70 percent overnight,
fell to 57.7 percent, according to Thomson Reuters data.
"It's a little less than expected. This is an economy that's
getting better but it's not getting better quickly," said Peter
Costa, president of Empire Executions Inc in New York.
"I think the Fed has wanted to see wage growth a little
better, and they're not getting it," said Costa, who added he
expected markets to react negatively to the data.
Earlier in the session, a U.S. missile strike on Syria hit
risky assets though prices recovered after a U.S. defence
official told Reuters the missile strike was a "one-off",
helping to calm market nerves.
Oil prices which surged more than 2 percent in Asian hours
gave up almost all of their earlier gains.
Brent crude futures were last up 0.3 percent at
$51.72 a barrel. U.S. West Texas Intermediate (WTI) crude
futures were flat.
"The U.S. missile strike on a Syrian air base overnight
caused a knee-jerk shift into safe havens, although the impact
was moderate as it is being interpreted as a one-off
proportionate response," said Ian Williams, a strategist at Peel
Hunt in London.
Demand for safe-haven assets such as gold remained intact.
Investors had already been on edge with talks poised to
begin between Donald Trump and Chinese leader Xi Jinping over
flashpoints such as North Korea and China's huge trade surplus
with the United States.
Investment flows underscored the broadly "risk-off" tone in
markets in recent sessions.
The latest data from Bank of America Merrill Lynch and fund
tracking firm EPFR showed investors pumped $12.4 billion into
bond funds over the past week while pulling $7.4 billion from
the equities, the largest outflow in 40 weeks.
Spot gold was up a percent while high-rated euro zone
government bonds edged lower.
The yield on Germany's 10-year government bonds
fell to a one-month low. Overnight, U.S. Treasury
yields dropped to their lowest level in over four months.
"Safe-haven flows are always affected by political events,
and when it affects countries where the U.S. and Russia are
interested, then investors become even more nervous because of
relations (between those two)," said DZ Bank strategist Daniel
"Especially now you also have talks between the U.S. and
China on North Korea," he added.
(Additional reporting by Abhinav Ramnarayan; Editing by Jeremy