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

Tue Sep 2, 2014 4:29pm EDT

(Corrects to say "The dollar last traded at 105.13" in
paragraph 4)
    * Strong U.S. manufacturing, construction data strengthen
dollar
    * Euro hits 1-year low vs dollar on ECB bets, yen at year
low
    * Stocks slip as tumbling oil prices pull down energy sector

    By Herbert Lash
    NEW YORK, Sept 2 (Reuters) - The dollar rose on Tuesday to
its highest this year against the yen on strong U.S.
manufacturing and construction data, while the euro slipped to a
12-month low on speculation the European Central Bank will move
toward looser monetary policy.
    U.S. oil prices fell more than $3 a barrel, leading shares
in the energy sector to account for more than half the decline
in the S&P 500. But the decline, in light volume, was not sharp
and did not indicate an immediate bigger downturn, analysts
said.   
    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 economic 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 dollar
last traded at 105.13, up 0.75 percent on the day.
    U.S. Treasuries fell further on the data, with
the 10-year note down 20/32 in price to yield 2.4176
percent.
    The euro sagged in early trade on bets ECB President
Mario Draghi will do more to help a wobbly euro zone economy.
The euro later recouped losses, down 0.03 percent at $1.3123.
    Investors are waiting to see what Draghi does when ECB
policy-makers meet on Thursday, said Ken Polcari, director of
the NYSE floor division at O'Neil Securities in New York.
    "If (the market) becomes disappointed on Thursday because
Draghi does not announce something more accommodative or
stimulative, then you'll see European markets under pressure and
flow over into the U.S. markets, at least temporarily," he said.
    Few investors expect immediate, major steps but most see
looser ECB 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 0.19 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 fell 53.6 points, or
0.31 percent, to 17,044.85. The S&P 500 slipped 4.35
points, or 0.22 percent, to 1,999.02 and the Nasdaq Composite
 added 8.38 points, or 0.18 percent, to 4,588.65.    
    "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 almost to $100 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 settled down $2.45
at $100.34 a barrel. U.S. crude fell $3.08 to settle at
$92.88 a barrel from Friday's close. 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, Dan Grebler and Chizu
Nomiyama)
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