Reuters: US Dollar Report: GLOBAL MARKETS-U.S. dollar drops on US jobs; Spain yields down on ECB

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GLOBAL MARKETS-U.S. dollar drops on US jobs; Spain yields down on ECB Sep 7th 2012, 17:40 Fri Sep 7, 2012 1:40pm EDT * U.S. jobs growth for August below expectations * Gold, U.S. Treasuries soar on U.S. jobs data * European stocks hold up after ECB news Thursday By Luciana Lopez NEW YORK, Sept 7 (Reuters) - The U.S. dollar dropped sharply on Friday and gold prices jumped to a six-month high as news of anemic U.S. jobs growth spurred investor bets that the Federal Reserve will embark on another round of monetary stimulus for the world's biggest economy, perhaps as soon as next week. Safe-haven U.S. Treasuries also soared on the disappointing August jobs data, while yields for Spanish and Italian government debt extended their slide to multi-month lows after the European Central Bank on Thursday announced plans to combat the region's three-year-old debt crisis by buying sovereign debt. The prospects for ECB action supported the euro early in the session, the currency extended its gains after the U.S. Labor Department reported nonfarm payrolls increased by 96,000 in August, well below forecasts for 125,000 new jobs. The Federal Reserve holds a two-day policy meeting starting on Wednesday, and financial markets will be keenly awaiting the U.S. central bank's statement issued on Thursday and a media briefing by Chairman Ben Bernanke. "This weak employment report, in jobs, wages, hours worked and participation is probably the last piece the Fed needs before launching another round of quantitative easing next week," said Joseph Trevisani, chief market strategist at Worldwide Markets in Woodcliff Lake, New Jersey. "QE will boost equities, damage the dollar and do little for the economy, but what else can an activist Fed do?" The U.S. dollar fell 0.94 percent to 80.28 against a basket of major currencies. The euro touched around a four-month high against the dollar of $1.2806 before paring gains to trade at $1.2785. Against the Swiss franc the common currency rose to its highest level in eight months. U.S. gold futures jumped to $1,739.70, the highest since late February. U.S. stocks seesawed as investors weighed the chances for more quantitative easing from the Fed, which would pump money into the economy to try to boost growth. The Dow Jones industrial average dropped 8.47 points, or 0.06 percent, to 13,283.53. The Standard & Poor's 500 Index gained 4.12 points, or 0.29 percent, to 1,436.24. The Nasdaq Composite Index dropped 1.20 points, or 0.04 percent, to 3,134.61. On Thursday, U.S. stocks soared to four year highs helped by the news from the euro zone. The benchmark 10-year U.S. Treasury note was up 9/32, with the yield at 1.6438 percent, after falling sharply in price on Thursday when the news of the ECB plan reduced the need for safe haven bets. "There are two main competing forces (in the market) right now. One is the fundamental state of the economy and the other is the belief in the power of central banks to keep risk asset prices afloat. This week is a very good demonstration of the tug of war that's going on," said Peter Cook, chief investment officer at Performance Trust Investment Advisors, LLC in Chicago. The FTSEurofirst 300 equity index closed at 1106.72, up 0.18 percent on the day. Ten-year Spanish bond yields slid to 5.646 percent, their lowest since early April. The MSCI world equity index climbed 1.12 percent to 329.99. The index is back to its level of early May, when demand was still being supported by a massive injection of cheap three-year funds into the banking system by the ECB. Oil prices rose in volatile trading on expectations for Fed stimulus, even as the weak jobs data dented the outlook for petroleum demand. Brent crude rose 0.52 percent to $114.08 a barrel. U.S. crude was up 0.81 percent at $96.30 a barrel. Link this Share this Digg this Email Reprints

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