* All eyes on U.S. November jobs data, due on Friday
* Fear of Fed paring between January-March drive stocks
* Nikkei at 6-year high on news Japan could ease more
* Oil at 3-month high, gold trades near 5-month low
By Barani Krishnan and Marc Jones
NEW YORK/LONDON, Dec 3 Fear that the U.S.
Federal Reserve will scale back its stimulus as the economy
recovers drove world stock markets down for a second straight
day on Tuesday, with Europe taking its worst hit since August,
while Treasury prices rose modestly.
Investors expect the Fed to start paring its $85
billion-a-month program if Friday's U.S. jobs report for
November shows encouraging growth. Many think a cut-back could
come in March, though some expect it by January, after U.S. data
on Monday pointed to steadying growth.
"It's not a question of if, it's a question of when, and you
always have the question of how much of it is real and how much
of it is emotional in nature?" said Gordon Charlop, managing
director at Rosenblatt Securities in New York.
Gold, which like stocks has been a key beneficiary of the
U.S. stimulus due to inflationary concerns, traded not far from
Monday's near 5-month low. Oil approached a 3-month high as the
U.S. recovery boosted the demand outlook for energy amid supply
outages in Libya.
The dollar slipped against the yen as investors took profits
from a month-long rally in the currency driven by speculation of
an imminent reduction in the Fed stimulus.
U.S. stocks opened lower, putting the S&P 500 on track for a
third consecutive decline.
The Dow Jones industrial average was down 100.89
points, or 0.63 percent, at 15,907.88. The Standard & Poor's 500
Index was down 7.52 points, or 0.42 percent, at 1,793.38.
The Nasdaq Composite Index was down 8.43 points, or 0.21
percent, at 4,036.83.
U.S. Treasuries prices edged higher, with the benchmark
10-year U.S. Treasury note up 9/32, its yield at 2.7662 percent.
European shares were rattled for the second day, with
Paris's CAC 40 sinking 2 percent, and the pan-regional
FTSEurofirst down 1.4 percent in its weakest day since
New fears over Europe surfaced as the cost of insuring
Ukraine's government debt against default jumped, leaving it a
whisker from 2009 peak levels.
Political worries also clouded markets as President Viktor
Yanukovich left Ukraine for a state visit to China, amid
protests about his decision to abandon an EU integration pact.
Outside Ukraine, investors reacted well to a debt swap by
Portugal aimed at getting it in shape for a possible return to
borrowing markets next year. Portugal's bonds and
"Portuguese bonds are actually posting a rally, reflecting
the fact that after this morning's exchange, next year's funding
is going to be less challenging," said Luca Cazzulani,
strategist at UniCredit said.
MSCI's world stock index, which tracks 45
countries, was down 0.57 percent, supported by early gains in
Asia. News of Japan's potential stimulus widening had lifted the
Nikkei toward a 6-year high.
The European Central Bank and Bank of England both meet on
Thursday, with the ECB in particular focus after last month's
surprise interest rate cut.
The euro edged up to just over $1.3585 and was at a
5-year high versus the yen. The yen tumbled against
both the euro and dollar on Monday after Reuters reported
exclusively that the Bank of Japan was looking to expand its
The Australian dollar dropped toward a 3-month low
after the Reserve Bank of Australia left rates on hold and said
the currency was "still uncomfortably high."
Spot gold rebounded to above $1,223 an ounce while
remaining close to the early July low hit on Monday.
Benchmark Brent crude rose nearly 1 percent to near
$112.50 a barrel. U.S. crude prices rose 2.2 percent to