* U.S. March payroll growth 88,000, less than forecast
* Wall Street falls 1 pct, European shares down 2 pct
* Dollar index falls 0.3 percent, Treasuries rally
By Wanfeng Zhou
NEW YORK, April 5 Major stock markets tumbled,
the dollar fell, while Treasury prices rallied on Friday after a
much weaker-than-expected U.S. jobs report added to fears the
U.S. economic recovery was losing steam.
Brent crude oil fell to a five-month low as bleak U.S. jobs
data and bulging inventories dimmed the outlook for economic
growth and fuel demand. Safe-haven gold prices rose.
U.S. employers hired at the slowest pace in nine months in
March, adding just 88,000 nonfarm jobs, the Labor Department
said, below an expected 200,000. The jobless rate ticked a tenth
of a point lower to 7.6 percent, but largely due to people
dropping out of the work force.
"The report will fuel concerns about another spring swoon
for the economy, the adverse impact of Congressional dysfunction
and, more generally, the weak underlying dynamism of the
economy," said Mohamed El-Erian, co-chief investment officer at
Pacific Investment Management Company.
The report followed a string of disappointing data this week
on U.S. manufacturing, private sector hiring and services
activity, raising concern the recent rally in equities has
outrun the economic fundamentals.
The data "adds concerns about fundamentals to concerns we
had about prices having gotten ahead of themselves, which
creates the potential for even further declines," said Bruce
McCain, chief investment strategist at Key Private Bank in
The MSCI world stocks index slipped 0.8
percent to 353.59 points.
U.S. stocks dropped more than 1 percent. The benchmark S&P
has shed 1.8 percent this week, by far its worst weekly decline
The Dow Jones industrial average dropped 151.44
points, or 1.04 percent, to 14,454.67. The Standard & Poor's 500
Index lost 18.19 points, or 1.17 percent, to 1,541.79.
The Nasdaq Composite Index fell 47.61 points, or 1.48
percent, to 3,177.37.
European shares tumbled 2 percent to 1156.83
The dollar fell 0.3 percent against a basket of major
currencies to 82.453, on expectations the Federal Reserve will
continue its bond-buying program, or quantitative easing. The
euro rose 0.6 percent to $1.3018.
"The market is assured that the Fed will not be taking its
foot off the QE gas pedal anytime soon," said Douglas Borthwick,
managing director at Chapdelaine Foreign Exchange in New York.
"This number is seeing follow-through in dollar weakness and
I expect that to continue against all countries who are not
embarking on QE of their own."
The yen remained weak after the Bank of Japan's aggressive
monetary easing a day earlier. The dollar was last up 0.8
percent at 97.08 yen, having risen to 97.19 in Asian
trading, the strongest since August, 2009.
The euro rallied 1.3 percent to 126.27 yen.
U.S. Treasuries rallied and yields fell to their lowest
levels of the year, after the jobs data. Weaker global equity
markets, the Bank of Japan's monetary stimulus program, and
escalating tension in the Korean peninsula also encouraged
investors to buy bonds.
The benchmark 10-year Treasury note was 17/32
higher after the report, easing its yield to 1.71 percent.
The price of the 30-year Treasury bond extended
an early gain to two points, pushing its yield down to 2.87
percent from 2.99 percent late on Thursday.
"A ton of traders must have fallen out of their seats this
morning after seeing this weak jobs report," said Thomas
DiGaloma, managing director at Navigate Advisors LLC in
German Bund futures extended gains to hit their
highest level since June 2012 at 146.54, up 58 ticks on the day.
Brent crude fell $1.49 to $104.85 a barrel. U.S.
crude dropped 95 cents to a low of $92.31.
Spot gold rose to $1,564 an ounce from $1,552.71.