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GLOBAL MARKETS-World stocks retreat on jobs data, rising dollar

Suzanne Barlyn
·4-min read

(Recasts with U.S. markets open; changes byline, dateline; previous LONDON) * Graphic: Global asset performance * Graphic: World FX rates * Graphic: Euro zone periphery govt bond yields By Suzanne Barlyn NEW YORK, March 3 (Reuters) - Shares from Asia to Europe were flat on Wednesday, while the dollar rose and two major Wall Street indices fell following disappointing U.S. employment data and rising bond yields. The pan-European STOXX 600 index gave back an earlier loss and rose 0.05% while MSCI's gauge of stocks across the globe shed 0.37%. "We're seeing a lot of what we've seen over the past week or so, that is markets being stymied to some extent by rising interest rates," said Randy Frederick, vice president of trading and derivatives for Charles Schwab in Austin, Texas. Rising bond yields and talk of higher inflation has "spooked" markets slightly, but growing earnings expectations and pent-up consumer demand are among the factors that should ultimately offset those concerns, Frederick said. The Dow Jones Industrial Average rose 59.36 points, or 0.19%, to 31,450.88, while the S&P 500 lost 28.76 points, or 0.74%, to 3,841.53 and the Nasdaq Composite dropped 294.15 points, or 2.2%, to 13,064.63. The declining S&P and Nasdaq followed a sell-off of high-flying technology shares and pivoted to sectors more likely to benefit from an economic recovery on the back of more fiscal stimulus and vaccination programs. Emerging market stocks rose 1.24%. MSCI's broadest index of Asia-Pacific shares outside Japan closed 1.46% higher, while Japan's Nikkei rose 0.51%. The U.S. economic recovery continued at a modest pace over the first weeks of this year, with businesses optimistic about the months to come and demand for housing "robust," but only slow improvement in the job market, the Federal Reserve reported on Wednesday. Data earlier on Wednesday showed that U.S. services industry activity unexpectedly slowed in February amid winter storms, while private payrolls increased less than expected amid job losses in manufacturing and construction, suggesting the labor market was struggling to regain speed. The U.S. Senate is expected to open debate on President Joe Biden's $1.9 trillion coronavirus relief package as early as Wednesday, with Democrats aiming to get it signed into law before March 14, when some current jobless benefits expire. That is spurring investor optimism that more imminent U.S. stimulus will energize the global economic recovery. UK Finance minister Rishi Sunak delivered what he hopes will be a last big spending splurge to get Britain's economy through the COVID-19 crisis, and announced a corporate tax hike starting in 2023 as he began to focus on the huge hit to the public finances. Longer-term U.S. Treasury yields rose on Wednesday, as investors looked to comments from Federal Reserve Chair Jerome Powell on Thursday for signs the central bank was set to acknowledge the risk of a rapid rise in rates. The benchmark 10-year note was poised to snap a three-day streak of declines following a jump to a one-year high of 1.614 percent last week, with many Fed officials having downplayed the rise in recent days. The equities retreat came as benchmark U.S. government bond yields moved higher after declining for three straight days. Benchmark 10-year notes last fell 16/32 in price to yield 1.4687%, from 1.415%. Euro zone government bond yields rose again on Wednesday amid doubts about whether the bloc's central bank will step in to curb the recent sharp increase, while data reflected optimism over a post-pandemic economic recovery. Although yields have dipped from their highs this week, pressure remains, with Germany's 10-year Bund yield, the benchmark for the region, rising 5 basis points to -0.29% on Wednesday. However, it was still far below its Feb. 26 spike of -0.203%. The dollar gained as investors priced for strong U.S. growth relative to other regions, while the safe-haven Japanese yen continued to weaken to a seven-month low. The dollar index rose 0.118%, with the euro down 0.16% to $1.207. Bitcoin jumped 6.93% to $50,734.95 and to its highest in a week. Spot gold dropped 1.3% to $1,715.43 an ounce. U.S. gold futures fell 0.85% to $1,715.30 an ounce. Oil prices rose, boosted by expectations that OPEC+ producers might decide against increasing output when they meet this week. U.S. crude recently rose 2.76% to $61.40 per barrel and Brent was at $64.16, up 2.33% on the day. (Reporting by Suzanne Barlyn; editing by Jonathan Oatis)