Stocks flat, Treasuries rise before payrolls
NEW YORK (Reuters) - U.S. stocks were little changed on Thursday as investors awaited Friday's government jobs report to assess the economic damage from a housing slump and gauge the direction of U.S. interest rates.
Treasury prices rose after a sharp drop in U.S. factory orders sparked buying of safe-haven government debt. The dollar fell on expectations of another Federal Reserve interest rate cut this month, boosting gold prices.
The European Central Bank and Bank of England on Thursday both left interest rates unchanged, as widely expected, but a warning by ECB President Jean-Claude Trichet over growth risks helped global bond prices, including Treasuries.
Stock investors looked to Friday's September jobs data as the best indicator of future Fed policy. Analysts said stocks could get a lift if the data confirms other reports this week suggesting the labor market held firm in September after a payrolls drop in August.
"We have a little bit of calm before the storm," said Georges Yared, founder and chief investment strategist at Yared Investment Research in Minneapolis. "We are waiting for the jobs report tomorrow and the earnings season goes in full force in the week after next."
Benchmark stock indexes were mixed. The Dow Jones industrial average .DJI was up 0.74 point, or 0.01 percent, at 13,968.79. The Standard & Poor's 500 Index .SPX was up 1.77 points, or 0.11 percent, at 1,541.36. The Nasdaq Composite Index .IXIC was down 1.78 points, or 0.07 percent, at 2,727.65.
DOLLAR SNAPS 3-DAY RALLY
A 3.3 percent drop in September factory orders contributed to a rise in U.S. Treasury prices, though gains were capped by the looming jobs data.
The benchmark 10-year U.S. Treasury note was up 6/32, with the yield at 4.5332 percent. The 2-year U.S. Treasury note was up 1/32, with the yield at 3.9997 percent. The 30-year U.S. Treasury bond was up 14/32, with the yield at 4.7728 percent.
Firmer bond sentiment in the United States came amid a rally in euro zone government debt after Trichet's warning that risks to economic growth lay to the downside.
In foreign exchange, the dollar snapped a three-day rally as dealers anticipated the payrolls data may keep the Federal Reserve on track to cut interest rates this month.
The dollar was down against a basket of major trading-partner currencies, with the U.S. Dollar Index .DXY down 0.10 percent at 78.498 from a previous session close of 78.573.
The euro was up 0.22 percent at $1.4114 from a previous session close of $1.4083. Against the Japanese yen, the dollar was down 0.18 percent at 116.50 yen from a previous session close of 116.71 yen.
U.S. crude oil futures rose above $81 a barrel on a drop in fuel inventories.
U.S. light sweet crude oil rose $1.61, or 2.01 percent, to $81.55 per barrel, and spot gold prices XAU= rose $9.00, or 1.24 percent, to $736.20.
In Europe, the FTSEurofirst 300 .FTEU3 index ended higher, extending a winning streak to four days as central banks kept rates on hold, rising 0.11 percent at 1,572.75 points. Banks were the top-weighted gainers.
In Japan, the Nikkei average .N225 fell 107.40 points, or 0.62 percent, to finish at 17,092.49. On Wednesday, the benchmark booked its highest close since July 31 at 17,199.89.
(Additional reporting by additional reporting by Burton Frierson, Caroline Valetkevitch, Kevin Plumberg, Pedro Nicolaci da Costa in New York; Sitaraman Shankar, in London; Aiko Hayashi in Tokyo)
