Dollar, stocks slide as US jobs data disappoint

[August 07, 2010]  LONDON (AP) -- Worse-than-expected U.S. jobs data Friday weighed on stocks and sent the dollar tumbling to multi-month lows against both the euro and the yen, as investors fretted that the U.S. economic recovery from recession is grinding to a halt.

In Europe, the FTSE 100 index of leading British shares closed down 33.89 points, or 0.6 percent, at 5,332.39 while Germany's DAX fell 73.95 points, or 1.2 percent, to 6,259.63. The CAC-40 in France was 48.14 points, or 1.3 percent, lower at 3,716.05.

In the U.S., the Dow Jones industrial average was down 137.14 points, or 1.3 percent, at 10,537.84 around midday New York time while the broader Standard & Poor's 500 index fell 15.99 points, or 1.4 percent, to 1,109.82.

European stocks and Wall Street futures had been trading higher before figures from the Labor Department accentuated fears that the U.S. economic recovery is slowing down faster than expected.

It revealed that U.S. employers, both public and private, shed 131,000 jobs during July, double market expectations and that June's 221,000 decline in payrolls was greater than initially thought. Both months have been impacted by jobs losses related to the census -- there were 148,000 census-related layoffs in July.

"If there are any remaining stragglers blinded by the notion that the U.S. recovery process was unstoppable the latest set of non-farm payroll data should bring them to their senses," said Howard Wheeldon, senior strategist at BGC Partners.

With few hopes of a turnaround in the near-term jobs picture, the figures have ratcheted up market expectations that the U.S. Federal Reserve and the Obama administration will announce further stimulus measures to get the world's largest economy back on track.

"The report intensifies the pressure on the administration and on the Fed to try to revive growth," said Nigel Gault, chief U.S. economist at IHS Global Insight. Fed rate-setters meet Aug. 10.

Whatever emerges, the dollar has borne the brunt of the market's concerns about the U.S. economy over the last few week.

By late afternoon London time, the euro was trading 0.8 percent higher at $1.3291, just shy of its earlier high of $1.3333 -- its best since May 3.

The value of the euro is not just related to the weakness of the dollar -- while the dollar has been weighed down by a run of disappointing economic news, the euro has been boosted by the easing in the government debt crisis and a raft of better than expected economic data in Europe.

Meanwhile, the dollar slid 0.7 percent to 85.20 yen, its lowest level since last November.

Bank of New York Mellon currency strategist Simon Derrick said there's every chance that the November low of 84.80 yen may represent a "line in the sand" for Japan's monetary authorities, and that they may intervene to stem the export-sapping appreciation of the currency. Too much of an appreciation of the yen could price out the country's exports in the international marketplace.

The jobs data also hit oil markets, and the benchmark crude for September delivery was trading 97 cents lower at $81.04 a barrel in electronic trading on the New York Mercantile Exchange.

Earlier, Japan's benchmark Nikkei 225 stock index lost 0.1 percent to 9,642.12 while Hong Kong's Hang Seng was up 0.6 percent to 21,678.80. South Korea's Kospi was little changed at 1,783.83. Markets in India, Thailand and Indonesia gained while Malaysia and Singapore dropped.

However, the Shanghai Composite Index rose 1.4 percent to 2,658.39 as investors weighed how much a slowdown in government spending and tighter monetary policy could cool China's economic growth.

[Associated Press; By PAN PYLAS]

Associated Press writer Alex Kennedy in Singapore contributed to this report.

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