August 4, 2010 / 4:37 AM / 9 years ago

Global stocks pare losses, dollar up on U.S. data

NEW YORK (Reuters) - Global stocks cut losses and the dollar rebounded on Wednesday after stronger-than-expected data on U.S. jobs and services industries rekindled bets on riskier assets.

Traders work at their desks in front of the DAX board at the Frankfurt stock exchange August 4, 2010. REUTERS/Remote/Amanda Andersen

U.S. Treasuries extended losses as investors booked profits from a recent rally that pushed yields on two-year note to record lows on Tuesday.

Investors took heart after data showed U.S. private employers added 42,000 jobs in July, compared with a revised gain of 19,000 in June, according to payrolls processor ADP Employer Services.

A later report from the Institute for Supply Management that said its services index rose in June above the median forecast of economists surveyed by Reuters, added to the buoyant mood.

Still, the positive growth shows the U.S. economy has not gained the job-creating momentum to pull the unemployment rate down from above 9 percent.

“The fact that it was better than expected is a good sign, but it’s more of the same of what we’re seeing in the jobs market. The recovery remains slow, and it’s something that’s going to take longer to play out,” said Michael O’Rourke, chief market strategist at BTIG LLC in New York.

MSCI’s all-country world index dipped back into the red after briefly turning positive, with a 0.2 percent decline.

But other major stock indexes posted slightly positive gains, although they struggled to stay above break-even.

The Dow Jones industrial average was up 4.62 points, or 0.04 percent, at 10,641.00. The Standard & Poor’s 500 Index was up 0.99 points, or 0.09 percent, at 1,121.45. The Nasdaq Composite Index was up 3.04 points, or 0.13 percent, at 2,286.56.

Crude oil fell for the first day in five sessions as a rally that powered prices to three-month highs near $83 a day earlier lost steam.

Prices did not react much to an attack on Iranian President Mahmoud Ahmadinejad, with analysts expressing caution about moving on initial reports from Iran.

“Prices haven’t moved today but we’ve just had a very strong rally,” said Paul Harris, head of natural resources risk management at Bank of Ireland. “Geopolitical risk from the Middle East is broadly priced in.”

U.S. light sweet crude oil fell 40 cents to $82.15 per barrel.

The dollar rebounded from an eight-month low against the yen on Wednesday and rose against the euro after the U.S. data.

on fears the Federal Reserve could embrace more monetary easing to jolt a faltering recovery, but it recouped losses on the U.S. economic data.

However, analysts said markets will likely require more positive news to reverse the steady selling of dollars that has prevailed in recent weeks.

“The market really needed to see an improvement in U.S. data,” said Jessica Hoversen, fixed-income and currency strategist at MF Global in Chicago. But, “We need to see better U.S. data and weak European data for the dollar to rally.”

The dollar was last at 86.26 yen, up 0.6 percent after falling to 85.33, its lowest since November. A move below 84.81 yen would mark a 15-year low. The euro fell 0.6 percent to $1.3146.

The greenback was up against a basket of major currencies, with the U.S. Dollar Index up 0.52 percent at 80.981.

U.S. Treasury debt prices were lower after the economic data put a cap on the bid to safety. Investors also showed an inclination to sell ahead of another round of Treasury debt supply next week.

The benchmark 10-year U.S. Treasury note was down 5/32 in price to yield 2.93 percent. The 2-year U.S. Treasury note was down 2/32 in price to yield 0.56 percent.

Gold prices broke above $1,200 an ounce in Europe on Wednesday, reaching their highest level in over two weeks.

Spot gold prices rose $15.05 to $1,199.70 an ounce.

Copper reversed losses as improving risk appetite coupled with jobs data from the United States, supported prices.

Earlier in Asia, Tokyo stocks fell 2.1 percent, while the MSCI Asia-Pacific index that excludes Japan was down 0.1 percent.

Fears that a strong yen would erode exporters’ profits and sap economic growth boosted Japanese government bonds, pushing the 10-year yield below 1 percent for the first time in seven years.

(Reporting by Herbert Lash; Editing by Kenneth Barry)

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