*Weaker US jobs report deadens equities rally
*MSCI world stock index hangs onto gain
*Consumer spending seen buoying economy
(Updates with US trading)
By Al Yoon
NEW YORK, Dec 3 (Reuters) - The U.S. dollar dropped and
stocks were little changed on Friday after the U.S.
unemployment rate rose last month, but investors latched onto
signs of economic strength, resisting heavier selling.
Nevertheless, some shift away from riskier assets lifted
prices of U.S. Treasury securities.
Stock gains in Europe evaporated and Wall Street opened
lower after the Labor Department said businesses added 39,000
nonfarm payrolls in November, falling short of the 140,000
expected by economists. The unemployment rate rose to a
seven-month high of 9.8 percent. For details see,
[]
But overall employment for September and October was
revised upward to show 38,000 more jobs created than previously
estimated.
What's more, other labor market indicators and consumer
spending reports have raised optimism about the economy after a
soft patch during the summer.
"The question is, was the number so weak that it creates
concern about the economy, market volatility and risk aversion?
I think probably not," said Nick Bennenbroek, head of FX
strategy at Wells Fargo in New York. "It's not bad enough to
raise concerns of a renewed recession."
U.S. stock indexes paused after two days of powerful gains,
falling but clawing back losses at one point.
The Dow Jones industrial average <> declined 12.75
points, or 0.11 percent, to 11,349.66. The Standard & Poor's
500 Index <.SPX> fell 2.21 points, or 0.18 percent, to 1,219.32
and the Nasdaq Composite Index <> climbed 0.30 point, or
0.01 percent, at 2,579.65.
The European benchmark FTSEurofirst 300 <> share
index declined 0.31 percent to 1,102.73, after closing its last
session at a two-week high. In Asia trading, the Nikkei <>
closed 0.1 percent higher.
The MSCI world equity index <.MIWD00000PUS> managed a 0.38
percent gain, coming off its highest since Nov. 22.
Many analysts viewed the disappointing employment report as
an outlier amid a slew of generally positive U.S. data released
the last few weeks that suggest traction for the economy.
Strong holiday spending, including all-time highs for online
sales on so-called Cyber Monday have made investors more
optimistic about year-end.
For the dollar, however, the U.S. jobs report injected
enough caution to create a fresh downdraft on the currency.
"Wall Street is going to reevaluate and go back to a slow
recovery kind of mode," said Subodh Kumar, chief investment
strategist at Subodh Kumar & Associates in Toronto.
Despite Friday's downward move in the dollar, the euro-zone
debt crisis is seen as a drag on the euro and is expected keep
it under pressure for some time. European authorities may have
bailed out Ireland, but investors are speculating euro-zone
nations such as Spain and Portugal will require assistance.
The dollar fell against a basket of major trading-partner
currencies, with the U.S. Dollar Index <.DXY> down 0.99 percent
at 79.51. The euro <EUR=> gained 0.98 percent to $1.3353.
Against the Japanese yen, the dollar <JPY=> slumped 1.23
percent to 82.84 yen.
U.S. Treasury prices jumped as traders unwound short
positions after the payrolls data, and others saw softer U.S.
growth supporting lower interest rate policy.
The benchmark 10-year Treasury yield declined 0.04
percentage point to 2.96 percent.
Before U.S. jobs data, European shares and the euro drew
support among chatter that the European Central Bank was in the
market for bonds from euro-zone nations in danger of rising
borrowing costs and in possible need of bailouts.
The euro zone debt of nations like Portugal outperformed as
the purchases reassured investors the bank would continue to
support markets despite the lack of any sign from President
Jean-Claude Trichet it would ramp up the program. []
Portugal's five-year credit default swaps tightened further
by midday to 409 basis points from 448 basis points, data from
Markit showed, while the premium paid for 10-year Portuguese
debt <PT10YT=TWEB> over German bunds <DE10YT=TWEB> declined.
In commodities, U.S. light sweet crude oil <CLc1> rose 6
cents, or 0.07 percent, to $88.06 per barrel, and spot gold
<XAU=> rose $17.30, or 1.25 percent, to $1401.50.
(Additional reporting by Rodrigo Campos and Gertrude
Chavez-Dreyfuss in New York, and Simon Jessop in London;
Editing by Kenneth Barry)
