GLOBAL MARKETS-Shares, oil, dollar slump on weak U.S. data

Wed Apr 3, 2013 3:06pm EDT

* U.S., European stocks decline
    * Oil slides about 3 percent as U.S. stockpiles swell
    * U.S. private-sector employment, services data disappoint
    * Investors await ECB and BOJ meetings, U.S. payrolls data

    By Wanfeng Zhou
    NEW YORK, April 3 (Reuters) - Major stock markets and the
dollar fell on Wednesday after unexpectedly weak growth in U.S.
private-sector jobs and services dented optimism about the
world's largest economy. 
    Oil prices slumped about 3 percent as U.S. crude inventories
swelled to their highest level since 1990. Signs of a struggling
U.S. economy also stoked worries about energy demand.
    U.S. companies hired at the slowest pace in five months in
March as recent strong demand for construction jobs evaporated,
while growth in the vast services sector slowed, signs that the
economic recovery could be hitting a soft patch. 
    The data sparked concern that the recent pick-up in U.S.
economic growth is losing momentum and provoked caution among
investors ahead of Friday's all-important government report on
employment for March.   
    "The softer-than-expected figure adds further support to our
long-held view that the U.S. economy would slow towards
mid-year, seeing sub-2 percent GDP growth in the second
quarter," said Andrew Grantham, economist at CIBC World Markets
in Toronto. "This is a negative for stocks and the U.S. dollar,
but a positive for fixed income."
    Analysts polled by Reuters forecast U.S. nonfarm payrolls
grew by 200,000 in March, with the unemployment rate seen
holding steady at 7.7 percent.
    The MSCI world stocks index slipped 0.6
percent to 357.81.
    Wall Street stocks fell, with the S&P 500 and Nasdaq briefly
trading more than 1 percent lower as sharp losses in oil prices
hit energy shares.
    The Dow Jones industrial average dropped 84.94
points, or 0.58 percent, to 14,577.07. The Standard & Poor's 500
Index fell 14.38 points, or 0.92 percent, to 1,555.87.
The Nasdaq Composite Index shed 34.03 points, or 1.05
percent, to 3,220.84.
    Some strategists said momentum for the market to move higher
remains. The S&P has been near an intraday record level of
1,576.09 for the past several sessions, inching to within three
points of that level on Tuesday before pulling back.
    "There are risks out there, but we've been creeping up
quietly for a long time with an impressive cumulative gain, and
that will continue so long as we don't have a crisis in the
offing," said David Kelly, chief market strategist for JPMorgan
Funds in New York.
    European shares lost 0.9 percent to close at
1,193.30 a day after surging 1.3 percent, as the weak U.S. data
stoked worries that global economic growth would struggle to
justify recent stock market gains.

    OIL RETREATS AS SUPPLY BUILDS
    Brent shed $3.58 to trade at $107.11 a barrel, while
U.S. crude slid $2.74 to settle at $94.45.
    Crude oil stocks in the United States rose by 2.7 million
barrels last week, according to the U.S. Energy Information
Agency, above expectations of a 2.2 million barrel build.
 
    The rise put U.S. commercial inventories at 388.62 million
barrels, the most since 1990 and close to the record 391.9
million barrels reached in 1982, the year the EIA started
tracking inventories.
    The dollar index, which measures the greenback versus
a basket of currencies, dropped 0.3 percent to 82.706.
    The euro rose 0.2 percent to $1.2847, while against
the yen the dollar fell 0.6 percent, to 92.82 yen.
    The European Central Bank and the Bank of Japan are both
expected to make monetary policy announcements on Thursday. 
    Analysts said a recent run of weak euro zone data, political
turmoil in Italy and concerns over Cyprus could lead ECB
President Mario Draghi to strike a dovish tone in his comments
after the meeting.
    The BOJ is widely expected to ramp up its bond buying and
extend the maturities of that debt, although some traders have
pared bets against the yen given already hefty short positions.
    "There's some event risk associated with the (BOJ)
announcement. The concerns over Europe have also intensified as
economic data continue to reflect recessionary conditions
there," said Michael Woolfolk, senior currency strategist at BNY
Mellon in New York.
    Expectations of further easing drove Japan's Nikkei stocks
average up 3 percent on Wednesday for its biggest
one-day rise in almost two months.
    The benchmark 10-year U.S. Treasury note was up 15/32, with
the yield at 1.8089 percent.
A couple walks along the rough surf during sunset at Oahu's North Shore, December 26, 2013. REUTERS/Kevin Lamarque

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