GLOBAL MARKETS-Dollar slides, shares rally after weak U.S. jobs data

Reuters

* U.S. jobs come in at 148,000 vs 180,000 estimate

* Dollar falls to two-year low vs euro

* Expectations of Fed's continued bond buying boosts stocks

* Brent crude rises on news of U.S.-Saudi rift over Mideast

By Herbert Lash

NEW YORK, Oct 22 (Reuters) - The dollar slid to a two-year

low against the euro and global equity markets rose for a fifth

straight session on Tuesday after weak U.S. jobs data reinforced

expectations the Federal Reserve will keep its easy-money policy

intact into 2014.

The S&P 500 index, a benchmark for U.S. stocks, set an

intraday record high, while U.S. Treasuries yields fell to the

lowest levels in three months on the labor market report.

Nonfarm payrolls increased by 148,000 in September, the

Labor Department said in a report delayed by the 16-day shutdown

of the federal government. The total was well below economists'

estimates of 180,000 new jobs.

Data for August was revised to show more positions created

than previously reported, but revisions to the July figures

showed employment gains that were the weakest since June 2012.

Economists and market analysts said the tepid pace of U.S.

job growth supported the decision by the Fed's policy-setting

Federal Open Market Committee in September not to begin to pare

its purchases of $85 billion a month in bonds to bolster the

economy.

"Today's underperforming jobs number fully justifies

September's cautious FOMC," said Joseph Trevisani, chief market

strategist at WorldWideMarkets in Woodcliff Lake, New Jersey.

"Dollar bulls will be discomfited but equities will find the

economic logic invigorating."

Stocks rose on Wall Street, in Europe and elsewhere in the

Americas after the jobs report. The euro jumped and the dollar

index slipped, while government debt prices rose on both sides

of the Atlantic, pushing yields lower.

Equities later pared gains, and the technology-rich Nasdaq

composite index briefly slipped into negative territory before

recovering.

MSCI's all-country stock index, which tracks

stocks in 45 countries, rose 0.72 percent to levels last seen in

January 2008. The FTSEurofirst 300 of leading European

shares rose 0.54 percent to close at 1,288.06.

On Wall Street, the Dow Jones industrial average was

up 97.76 points, or 0.64 percent, at 15,489.96. The Standard &

Poor's 500 Index was up 11.86 points, or 0.68 percent, at

1,756.52. The Nasdaq Composite Index was up 11.00

points, or 0.28 percent, at 3,931.05.

The euro hit a

high of $1.3792 against the dollar, its strongest level since

Nov. 14, 2011. It was last at $1.3782, up 0.74 percent.

Against the yen, the dollar fell as low as 97.86 yen

was last down 0.06 percent at 98.12 yen in choppy trade.

The dollar index, a basket of six major trading

currencies, was down 0.57 percent.

"This really does push us into a January, February mode (for

Fed tapering), and if there is a shutdown, possibly even

further," said Aaron Kohli, an interest rate strategist at BNP

Paribas in New York.

The deal reached by Congress last week to end the government

shutdown was only a temporary fix, providing funds for the

government until Jan. 15 and raising the government's debt

ceiling until Feb. 7 -- a situation that could lead to another

U.S. political standoff early next year.

Benchmark 10-year notes were last up 25/32 in

price to yield 2.516 percent, the lowest since July 24.

German Bund futures hit two-week highs, closing 63

ticks higher on the day at 140.54, while yields on German

10-year government debt fell below 1.80 percent.

"This report definitely gives the Fed pause. It keeps QE

alive and bonds will like it and so might stocks. This is

positive for all asset prices," said Craig Dismuke, chief

economic strategist with Vining Sparks in Tennessee.

Brent crude oil rose above $110 per barrel, pulling its

premium above U.S. light crude to the widest in six months,

after news of a deterioration in relations between the United

States and key OPEC oil producer Saudi Arabia.

Brent for December rose 33 cents a barrel to settle

at $109.97. U.S. crude futures slipped $1.42 to settle at $97.80

a barrel.

U.S. gold for December, the most active gold futures

contract on New York's COMEX, rose $26.80, or 2 percent, to

settle at $1,342.60 an ounce.

European equities set five-year highs in a broad-based rally

spurred by the jobs report and corporate results that beat

analysts' estimates.

Norwegian insurer Gjensidige jumped 8 percent on

third-quarter earnings that beat forecasts and a surprise

special dividend. UK consumer goods firm Reckitt Benckiser Group

rose 5.2 percent after reporting higher revenue and

saying it was reviewing options for its pharmaceuticals unit.

Rates

View Comments (2)