GLOBAL MARKETS-Dollar jumps after U.S. data; bond prices slump

Tue Sep 2, 2014 12:46pm EDT

* Strong U.S. manufacturing, construction data strengthen
dollar
    * Euro hits 1-year low vs dollar on ECB bets, yen also falls
    * Stocks little changed as investors await ECB policymakers

 (Adds close of European bond, stock markets)
    By Herbert Lash
    NEW YORK, Sept 2 (Reuters) - The dollar jumped to its
highest this year against the yen on Tuesday, lifted by strong
U.S. economic data, while the euro slipped to a one-year low on
speculation the European Central Bank will move toward looser
monetary policy later this week.
    U.S. manufacturing hit a nearly 3-1/2 year peak in August
and construction spending rebounded strongly in July, the latest
signs of U.S. economic vigor. 
    The data lifted the dollar almost 0.8 percent against the
Japanese yen, pushing it above the 105 yen mark for the first
time since the first week of this year. The yen last traded at
105.11, up 0.73 percent on the day.
    U.S. Treasuries fell further on the data, with
the 10-year note down 19/32 in price to yield 2.41
percent.
    The euro sagged on bets ECB President Mario Draghi
will do more to help a wobbly euro zone economy. The euro was
down 0.04 percent at $1.3122. 
    "Even if Draghi doesn't announce rate cuts or QE (asset
purchases), I think he will open doors to further significant
action further down the road and that should be enough to
support the market at least for now," said Nick Stamenkovic, a
strategist at RIA Capital Markets in Edinburgh.
    Global equity markets and European shares edged lower before
the ECB's meeting on Thursday. Few investors expect major steps
but most see looser policy in the future as the euro zone fails
to grow due to austerity measures and conflict in Ukraine.
    MSCI's all-country world index of 45
countries fell 0.25 percent while the pan-European FTSEurofirst
300 index, which has risen nearly 7 percent from its
mid-August low, closed down 0.07 percent at 1,375.93.
    Wall Street was mixed.
    The Dow Jones industrial average was down 62.96
points, or 0.37 percent, at 17,035.49. The Standard & Poor's 500
Index was down 6.15 points, or 0.31 percent, at 1,997.22.
The Nasdaq Composite Index was up 2.58 points, or 0.06
percent, at 4,582.85. 
    "The market is probably pricing in stronger numbers on the
economic side but it's still very much positive," said James
Liu, global market strategist at JPMorgan Funds, in Chicago. 
    "We are expecting to see stronger economic numbers, the
market is certainly expecting that, and as long we get them we
can do quite well above 2,000 on the S&P 500," Liu said.
    Brent crude fell below $101 a barrel, pressured by worries
about slowing oil demand growth in China and Europe, a strong
U.S. dollar and ample supplies.
    Brent crude for October delivery was down $2.12 at
$100.67 a barrel. U.S. crude was down $2.70 from Friday's
close at $93.26 a barrel. There was no trading in the United
States on Monday because of the Labor Day holiday.
    

 (Reporting by Herbert Lash; Additional reporting by Marc Jones
in London; Editing by Meredith Mazzilli and Dan Grebler)
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