(Updates with prospects for Wall St, latest prices)
By Gerrard Raven
LONDON, May 2 (Reuters) - The dollar and European stocks
weakened slightly on Monday in holiday-thinned markets while
euro zone government bonds rose after positions became oversold
following Friday's better than expected U.S. employment data.
The subdued mood on equities looked set to continue in New
York after Microsoft <MSFT.O> dropped its bid for Yahoo Inc
<YHOO.O>, clouding the outlook for mergers and acquisitions.
Oil prices were on the rise again following a statement from
Iran's foreign ministry that the country would not accept any
package of incentives from world powers that violates its rights
to develop its nuclear industry.
(For report on Iran please double click on [])
On Friday U.S. non-farm payrolls data showing a 20,000 fall
in jobs last month relieved investors who had expected a drop
four times as great, boosting the dollar and shares.
But markets, thinned on Monday by London's closure for a
public holiday, had second thoughts and the dollar eased in
Europe despite data showing euro zone investors' morale had
unexpectedly weakened in May.
(For details on investor sentiment please double click on
[])
The dollar was down 0.11 percent on the day against a basket
of six major currencies <.DXY> at 73.375.
"The jobs data was still a negative number so people have
tried to reassess the data they saw last week. They realise that
the worst is not over and we will still have to expect weak U.S.
data so it's not the time to buy the dollar strongly," said
Antje Praefcke, currency strategist at Commerzbank.
European shares took a breather after last week's gains,
easing after influential U.S. investor Warren Buffett said on
Sunday the United States was in recession as he defines it.
The FTSE Eurofirst 300 index <> was 0.29 percent lower
at 1000 GMT.
EADS <EAD.PA> dropped 3.35 percent after German media
reported that the Airbus consortium of which it is a part could
be forced to delay some deliveries of its A380 superjumbo
airliner.
"We had a pretty solid rally on Friday on the back of the
jobs data, and with London off today, volumes are very low as
nobody is willing to build any position," said Chicuong Dang,
equity analyst at Richelieu Finance, in Paris.
In Asia, Japan was on holiday, but in Hong Kong stocks fell
from the previous session's 3-1/2 month high, closing down 0.22
percent.
Yahoo shares traded down 21 percent at $22.50 ahead of the
open on Wall Street after Microsoft backed away from a takeover
bid when Yahoo Chief Executive Jerry Yang demanded the price be
raised to $37 a share.
Euro zone government bond prices rose, recouping some of
their losses from Friday after the U.S. non-farm payroll
figures. The yield on the interest-rate sensitive two-year
Schatz <EU2YT=RR> was down 2.8 basis points at 3.796 percent.
But Kornelius Purps, a fixed income strategist at Unicredit,
warned: "The main thing is not to over-interpret price action in
a thinner market."
Supply disruptions in Nigeria added to the tension between
Iran and the West pushed up oil prices, with U.S. light crude
for June delivery <CLc1> 67 cents higher at $116.98 a barrel.
(Editing by Ron Askew)
