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GLOBAL MARKETS-U.S. dollar and bond yields lower, stocks up after jobs report
February 3, 2017 / 4:28 PM / a year ago

GLOBAL MARKETS-U.S. dollar and bond yields lower, stocks up after jobs report

(Updates to U.S. market open)

* U.S. dollar sees fourth week of losses, bond yields fall

* U.S. payrolls rise beats estimates, hourly earnings fall

* Oil up after U.S. flags sanctions on Iran

By Dion Rabouin

NEW YORK, Feb 3 (Reuters) - The U.S. dollar headed for its fourth straight weekly loss and bond yields fell on Friday after wage growth slowed in the monthly employment report, suggesting the Federal Reserve may not raise interest rates again soon

Stock prices rose though on the creation of more jobs than expected in the U.S. Labor Department jobs data, while President Trump’s executive order to review banking regulations introduced after the 2008 crisis also boosted financial sector stocks.

U.S. non-farm payrolls increased by 227,000 jobs last month, the largest gain in four months, but the unemployment rate rose one-tenth of a percentage point to 4.8 percent and wages increased only modestly, suggesting that there was still some slack in the labor market.

“The payrolls report is a mixed bag,” said Omer Esiner, chief market analyst at Commonwealth Foreign Exchange in Washington.

“It’s certainly reassuring to see the upside surprise in hiring. More importantly we saw a rise in labor force participation (which) could be a signal that workers that had been sidelined may be more encouraged to look for jobs. That’s a good sign.”

The Dow Jones Industrial Average rose 175.57 points, or 0.88 percent, to 20,060.48, the S&P 500 gained 16.18 points, or 0.71 percent, to 2,297.03 and the Nasdaq Composite added 24.68 points, or 0.44 percent, to 5,660.87.

U.S. Treasury yields fell on the disappointing wage growth numbers, indicating inflation may not rise at a pace that would lead the Federal Reserve to raise interest rates soon as expected.

“Most of the disappointment is really focused around the inflation pressures that would presumably force the Fed to act,” said Aaron Kohli, an interest rate strategist at BMO Capital Markets in New York.

Benchmark 10-year Treasury prices rose 11/32 to yield 2.43 percent and the lower yields undermined the U.S. dollar, which had risen in early trading on expectations of a solid reading.

The U.S. currency has been hit by uncertainty about policy direction created by President Trump’s flurry of executive orders in recent weeks after an initial burst of enthusiasm for the new administration’s promises of tax reform, infrastructure spending and financial deregulation.

Sterling steadied after its worst fall since October, while the euro was set for its sixth week of gains in seven, at $1.0790 and having gone as high as $1.0829 after the latest signs that growth and inflation are rising in the euro zone.

European stocks gained broadly with the STOXX 600 up 0.6 percent, bouncing back from losses seen in the previous session. The index remains negative for the week as caution about the impact of Trump’s policies has weighed on a rally in risky assets.

Euro zone corporate earnings have been strong so far and a survey on Friday showed euro zone businesses started 2017 by increasing activity at the same multi-year record pace they set in December and faster growth in demand suggested the good times will continue.

Chinese stocks slumped, sending Asian markets skidding for their biggest losses in two weeks after Beijing unexpectedly raised short-term interest rates to slow capital flight, adding to growing concerns about Trump’s aggressive policies.

MSCI’s all-world stock index, which tracks bourses in 46 markets around the globe, rose 0.6 percent, on pace for its third day of gains and its largest one-day percentage gain in more than a week.

Oil prices rose 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.

Crude futures were up 1.1 percent with Brent crude set to gain more than 2 percent for the week.

London copper fell, however, after China’s tightening of policy spooked metals markets.

Gold rose 0.3 percent. (Reporting by Dion Rabouin; Additional reporting by Vikram Subhedar in London and Danilo Masoni in Milan; Editing by Mark Heinrich and Clive McKeef)

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