Reuters: US Dollar Report: GLOBAL MARKETS-Stocks, oil fall after tepid U.S. data

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GLOBAL MARKETS-Stocks, oil fall after tepid U.S. data May 3rd 2012, 18:19 Thu May 3, 2012 2:19pm EDT * Slower expansion in U.S. service sector dents optimism * Poor U.S. retail sales also cast pall over market * Euro steady after upbeat assessment from ECB's Draghi By Herbert Lash NEW YORK, May 3 (Reuters) - Global stocks and crude oil fell on Thursday after data showing tepid growth in the U.S. services sector raised concerns about the economic recovery a day before a highly anticipated labor market report for April. Stocks turned lower, government debt pared losses and the U.S. dollar trimmed gains against the yen after the Institute for Supply Management said its services sector index fell to 53.5 in April from 56.0 the month before. The report missed economists' forecasts for a reading of 55.5, according to a Reuters survey. A reading above 50 indicates expansion in the sector. To be sure, fears that the labor market recovery was stalling eased a bit after the number of Americans filing new claims for jobless aid fell more than expected last week. The Labor Department said initial claims for state unemployment benefits dropped 27,000 to a seasonally adjusted 365,000. The mixed set of data put traders on the defensive before Friday's government payrolls report, which is expectedly to show a further slowdown in hiring last month. "The real game changer is tomorrow so the market is just taking a breather," said Justin Hoogendoorn, an interest-rate strategist at BMO Capital Markets in Chicago. Wall Street moved lower on the ISM report after hovering near break-even after the open. Weak retail sales data also weighed on U.S. stocks. According to Thomson Reuters data, 52.9 percent of retailers missed monthly same-store sales expectations for April. The Dow Jones industrial average was down 83.59 points, or 0.63 percent, at 13,184.98. The Standard & Poor's 500 Index was down 12.00 points, or 0.86 percent, at 1,390.31. The Nasdaq Composite Index was down 39.51 points, or 1.29 percent, at 3,020.34. In Europe, equities erased early gains to close broadly flat after the weak U.S. data and dampened expectations of fresh central bank measures to stimulate growth eclipsed strong company earnings. The FTSEurofirst 300 index of top regional shares closed up 0.1 percent at 1,044.39 after a choppy session. MSCI's all-country world equity index retreated, falling 0.6 percent to 326.20. The euro rose against the yen and rallied from two-week lows versus the U.S. dollar to trade little changed after European Central Bank chief Mario Draghi gave a more upbeat assessment of the euro zone than expected, reducing expectations for further monetary easing. Draghi, in comments after the ECB kept rates unchanged at 1 percent, said the euro zone's economy was likely to recover this year, although the outlook remained vulnerable to downside risks. He added that inflation was likely to remain above 2 percent this year.. The U.S. dollar index up 0.16 percent at 79.256 while the euro was down 0.10 percent at $1.3142. But gains in the euro could be short-lived ahead of elections in France and Greece at the weekend. Oil slipped under $117 a barrel after OPEC said it had opened the taps more to weaken prices. Oil prices dropped after OPEC said it was unhappy about the likely effect on demand of high prices, while disappointing data helped paint a gloomy outlook for the world economy, reviving concerns about a drop in demand. Brent crude for June delivery fell $1.99 to $116.21 a barrel. U.S. crude futures fell $2.71 to $102.51 a barrel. Government debt pared losses to trade near break-even. The benchmark 10-year U.S. Treasury note was up 2/32 in price to yield 1.92 percent. The 30-year U.S. Treasury bond was up 7/32 to yield 3.11 percent. Link this Share this Digg this Email Reprints

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