GLOBAL MARKETS - Stocks, dollar fall as jobs data spook markets

By Herbert Lash

NEW YORK (Reuters) - Stocks and the price of oil fell on Wednesday after reports on greater-than-expected job losses and crude inventories reminded investors betting on a looming recovery that the U.S. economy is still very weak.

The dollar fell across the board, reversing sharp gains against the euro earlier this week, as the steep job losses in the U.S. private sector reignited fears of a deep recession.

A disappointing revenue outlook from technology bellwether Intel Corp and Alcoa Inc's plans to cut more than 15,000 jobs, halve capital spending and sell businesses also heightened concerns about the severity of the recession.

While separate data showed planned layoffs at U.S. firms eased in December from the previous month's seven-year high, they were up 275 percent annually as the 12-month-old recession cuts a destructive swathe through the U.S. economy.

But a report from ADP Employer Services that said U.S. private employers shed a more-than-expected 693,000 jobs in December, up from a revised 476,000 jobs lost the previous month, sent the most shivers through financial markets.

The ADP report foreshadows likely grim labor data for December from the U.S. Labor Department on Friday and underscored the challenge facing President-elect Barack Obama to revive the economy with a $775 billion stimulus package.

"I can't imagine this (ADP data) is going to bode very well for any kind of forecasting going into the nonfarm payroll and unemployment rate numbers that we're going to see on Friday," said Dave Lutz, a managing director at Stifel Nicolaus in Baltimore. "It is absolutely terrible."

In early afternoon trade, the Dow Jones industrial average was down 175.63 points, or 1.95 percent, at 8,839.47. The Standard & Poor's 500 Index was down 18.89 points, or 2.02 percent, at 915.81. The Nasdaq Composite Index was down 35.14 points, or 2.13 percent, at 1,617.24.