GLOBAL MARKETS-Shares, oil fall sharply on U.S. growth concern

Wed Apr 3, 2013 4:45pm EDT

* S&P 500 posts biggest daily decline in more than a month
    * 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 3 percent, the steepest daily drop in
five months, as U.S. crude inventories swelled to their highest
since 1990. Signs of a struggling U.S. economy also stoked
worries about energy demand. U.S. gasoline fell more than 4
percent.
    News the Pentagon was sending a missile defense system to
Guam in the coming weeks, with U.S. Defense Secretary Chuck
Hagel citing a "real and clear" danger from North Korea, added
to investor caution. North Korea, meanwhile,
said it had "ratified" a merciless attack against the United
States, potentially involving a "diversified nuclear strike".
 
    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, suggesting 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.   
    "With some weaker economic data, you're seeing some risk-off
action going on today. People are paring positions across the
board ahead of the jobs number Friday," said Michael James,
managing director of equity trading at Wedbush Securities in Los
Angeles.
    Headlines on North Korea add "another risk element to the
market," he said.
    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 0.7
percent to 357.51.
    Wall Street stocks fell, with the S&P 500 and Nasdaq losing
more than 1 percent as the sharp drop in oil hit energy shares.
    The Dow Jones industrial average dropped 111.66
points, or 0.76 percent, to close at 14,550.35. The Standard &
Poor's 500 Index dropped 16.56 points, or 1.05 percent,
to end at 1,553.69. The Nasdaq Composite Index dropped
36.26 points, or 1.11 percent, to 3,218.60. 
    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.
    European shares lost 0.9 percent to close at
1,193.30 a day after surging 1.3 percent.

    OIL RETREATS AS SUPPLY BUILDS
    Brent shed $3.58 to settle 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 reached in 1982, the year the EIA started tracking
inventories.
    The dollar index, which measures the greenback versus
a basket of currencies, dropped 0.2 percent to 82.737.
    The euro rose 0.2 percent to $1.2847, while against
the yen the dollar fell 0.5 percent to 92.99 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
13/32 in price, with the yield at 1.8158 percent.
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