GLOBAL MARKETS-Dollar rallies, U.S. yields spike after jobs data

Fri Jul 5, 2013 10:41am EDT

* Dollar strengthens, hits gold and copper prices
    * European shares fall after gains on central bank pledges
    * U.S. stocks tick up but MSCI global gauge dips


    By Rodrigo Campos
    NEW YORK, July 5 (Reuters) - The dollar rose broadly on
Friday and Treasury debt yields jumped, while Wall Street pared
initial gains in volatile trading and a gauge of world stocks
fell after strong job market data showed the world's largest
economy on a solid footing.
    U.S. jobs growth was better than expected in June and the
employment count for the prior two months was revised higher.
The data likely keeps the Federal Reserve on track to scale back
its massive monetary stimulus, known as quantitative easing, 
later this year.
    The number "should by rights send Wall Street's bulls
rampaging, but the market's addiction to QE may yet hold them
back," said Alister Gaines, director of CDC Wealth Management in
Edinburgh.
    "The odds of the Fed starting to taper QE in September as
planned have just shortened - and the markets know it."
    The Dow Jones industrial average rose 4.84 points or
0.03 percent, to 14,993.39, the S&P 500 gained 1.86
points or 0.12 percent, to 1,617.27 and the Nasdaq Composite
 added 3.8 points or 0.11 percent, to 3,447.47.
    Equity futures initially got support from comments from
central banks in Britain and the euro zone on Thursday
signalling that, unlike the United States, they are in no hurry
to unwind stimulus.
    However, the strong data out of the United States reversed
bets on the increased stimulus out of Europe and European
shares, which had their best day in 11 months on Thursday, fell
broadly.
    The FTSEurofirst 300 index was down 0.8 percent
after it gained 2.4 percent on Thursday. MSCI's global share
index was down 0.2 percent.
    
    TREASURY YIELDS SPIKE, GREENBACK JUMPS
    The strong data increased expectations of a Fed move to
adjust the pace of bond purchases that has helped support the
economy, sending benchmark U.S. 10-year Treasury yields
 to a high of 2.719 percent, the highest in almost
two years.
    "A bit of a universally strong report, which has been
accompanied by a solid selloff in the Treasuries market," said
Ian Lyngen, senior government bond strategist at CRT Capital
Group in Stamford, Connecticut. 
    "This certainly increases the probability that the Fed
tapers at the September meeting rather than later in the year."
    The strong jobs data also made clear that Federal Reserve
policy may soon start to vary from other large central banks,
favoring the U.S. currency.
    The U.S. dollar hit a five-week high versus the yen 
and a six-week peak against the euro. The dollar index
 hit its highest in three years.
    "The data is strong enough that it validates the ECB's
(European Central Bank) and BOE's (Bank of England) attempts to
try to distinguish their policy actions from those in the U.S.,"
said Alan Ruskin, head of G10 FX strategy at Deutsche Bank in
New York.
    The euro was down 0.6 percent against the dollar at $1.2283
after hitting $1.2805, its lowest since May 20. Against
the yen, the dollar touched a peak of 101.13 yen, its
highest since May 31. It was last at 100.83, up 0.8 percent.
    
  
    
    The firmer dollar weighed on some dollar-priced commodities
and spot gold tumbled 3 percent to $1,211.4 an ounce.
Copper was down 2.9 percent at $6,750 a ton.
    Brent crude, however, rose over $106 a barrel after
Egypt's army said it was on high alert after an attack in Sinai,
though ports and shipping through the Suez Canal have been
operating normally.
    WTI crude prices rose 0.4 percent to $101.65 per
barrel.
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