Reuters: US Dollar Report: GLOBAL MARKETS-Dollar dips on US jobs; Spain yields fall on ECB

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GLOBAL MARKETS-Dollar dips on US jobs; Spain yields fall on ECB Sep 7th 2012, 16:06 Fri Sep 7, 2012 12:06pm EDT * U.S. jobs growth for August below expectations * European shares gain on ECB plan * Gold, U.S. Treasuries soar on U.S. jobs data By Luciana Lopez NEW YORK, Sept 7 (Reuters) - The dollar took a beating on Friday and gold hit a six-month high as weak U.S. jobs growth fueled investor bets that the Federal Reserve will launch another round of stimulus for the world's biggest economy, perhaps next week. Safe-haven U.S. Treasuries also jumped on the disappointing jobs data, while yields for Spanish and Italian government debt continued to slide to multi-month lows on the European Central Bank's plans to combat the region's three-year-old debt crisis. The prospects for ECB action supported the euro early in the session, and the single currency extended 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 Open Market Committee holds a two-day meeting beginning on Wednesday, and financial markets will be keenly awaiting the U.S. central bank's policy statement issued after the close of the meeting and a media briefing by Fed 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 greenback fell 0.96 percent to 80.263 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 $1.2782. Against the Swiss franc the common currency rose to its highest level in eight months. its strongest since late February, and U.S. gold futures jumped to $1,737.30. 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 4.95 points, or 0.04 percent, to 13,287.05. The Standard & Poor's 500 Index gained 3.77 points, or 0.26 percent, to 1,435.89. The Nasdaq Composite Index dropped 0.11 points, or 0.00 percent, to 3,135.71. The benchmark 10-year U.S. Treasury note was up 16/32, with the yield at 1.6215 percent. "The weaker-than-expected job growth number caused U.S. Treasuries to rally across the curve," said Eric Stein, vice president and portfolio manager at Eaton Vance Investment Managers in Boston. The data "all but guarantees the Fed will extend the low rate guidance at next week's policy meeting (and) makes QE3 a lot more likely." The Fed has said since January that it expects to keep rates near zero at least through late 2014. European stocks advanced after the ECB on Thursday unveiled a new plan for potentially unlimited bond buying aimed at lowering borrowing costs for heavily indebted nations like Spain and Italy and easing fears over the future of the euro. The FTSEurofirst 300 equity index rose to 1105.73, up 0.09 percent on the day. Ten-year Spanish bond yields slid to 5.666 percent, their lowest since early April. The MSCI world equity index climbed 1.07 percent to 329.83. 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. Brent crude rose 0.19 percent to $113.70 a barrel. U.S. crude was up 0.12 percent at $95.64 a barrel. Link this Share this Digg this Email Reprints

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