* Stocks hit by surprisingly weak non-farm payrolls data
* Euro gains against dollar; Bunds pare losses
* Oil dips, gold hits three-week high
* U.S. stock futures signal weaker Wall Street open
By Simon Jessop
LONDON, Dec 3 (Reuters) - European shares and U.S. stock
futures fell sharply and the dollar weakened on Friday, after
forecast-lagging U.S. jobs data cast doubts on the strength of
recovery in the world's largest economy.
Non-farm payrolls data showed 39,000 jobs were added in
November, well below expectations for 140,000 new posts,
although October's reading was revised up by 38,000.
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The prospect of a slower recovery hit stocks and oil <CLc1>
and helped Bunds pare losses while U.S. Treasuries pushed into
positive territory.
Gold <GCG1> was boosted to a three-week high.
The dollar slumped more than 1 percent versus the yen and
extended losses against the euro <EUR=>. The euro traded at up
0.9 percent against the dollar at $1.3340.
Among other currencies, the dollar <.DXY> traded down 1
percent against a basket of other currencies.
"This is definitely a sign that the U.S. labour market
recovery is not on track and is not improving ... compared to
expectations this is an awful labour market report," said
Kornelius Purps, strategist at Unicredit in Munich.
Shares went into reverse, with the benchmark FTSEurofirst
300 <> index down 0.6 percent, after closing the previous
session at a two-week high, while the MSCI world equity index
<.MIWD00000PUS> was up 0.3 percent.
U.S. stock futures <NDc1><SPc1><DJc1> pointed to falls of
0.5-0.7 percent at the Wall Street open.
ECB BUYING
Stocks and the euro had opened steady and moved higher ahead
of the jobs data, on talk of renewed buying by the European
Central Bank of peripheral euro zone debt, albeit in small
sizes, which had supported markets in the previous session.
The purchases helped peripheral euro zone debt outperform,
reassuring investors the bank would continue to support markets
despite the lack of any sign from President Jean-Claude Trichet
it would ramp up the programme. []
"It remains to be seen whether the ECB is really picking up
the pace of bond buying, but I wouldn't count on it. They've
certainly shown a lack of appetite in the past," said Everett
Brown, strategist at IDEAglobal in London.
Portugal's five-year credit default swaps tightened to 409
basis points from 448 basis points, data from Markit showed,
while the premium paid for 10-year Portuguese debt <PT10YT=TWEB>
over benchmark German bunds <DE10YT=TWEB> edged lower.
Elsewhere in the periphery, Ireland's yield spread over
bunds <IE10YT=TWEB> tightened slightly to 583 basis points.
In contrast to the weak U.S. macroeconomic release, the PMI
survey of business purchasing managers, released earlier, showed
the euro zone's service sector economy pulled ahead in November
thanks to strengthening German and French business.
[]
(Reporting by Simon Jessop; editing by Mike Peacock)
