* Strong data lifts U.S. dollar against currency basket
* China manufacturing index dips, missing forecasts
* Gold up, 10-yr Treasury yield dips just shy of 3 pct
By Rodrigo Campos
NEW YORK, Jan 2 World equity markets kicked off
2014 with a whimper on Thursday as slightly disappointing
Chinese manufacturing data triggered some profit-taking, while
oil prices were sharply lower as Libya prepared to reopen a
U.S. stock indexes posted their largest falls in three weeks
on the first trading day of 2014, after the benchmark S&P 500
finished its best year since 1997.
The dollar rallied against a basket of major currencies
as U.S. jobs, housing and manufacturing data gave support
to the Federal Reserve's decision to start slowing its stimulus
program this month.
Global manufacturing ended 2013 on a strong note as major
exporters like Japan, Germany and Italy posted their fastest
growth in years, although manufacturing data from China proved
"There's no fundamental underpinning to the decline today,
just basic portfolio rebalancing on the first day of a new tax
year," said Jim McDonald, chief investment strategist at
Chicago-based Northern Trust Global Investments. "People are
taking profits and seeking bargains."
The Dow Jones industrial average fell 135.31 points
or 0.82 percent, to 16,441.35, the S&P 500 lost 16.38
points or 0.89 percent, to 1,831.98 and the Nasdaq Composite
dropped 33.521 points or 0.8 percent, to 4,143.069.
The pan-European FTSEurofirst 300 ended down 0.8
percent after starting the day at a 5-1/2-year high. MSCI's
45-country share index was down 1 percent. U.S.
dollar-denominated Nikkei futures fell 2.1 percent.
Crude oil prices fell after Libya prepared to restart a
major oilfield and on speculation of a sharp rise in U.S.
Brent was last down 2.8 percent at $107.72 a barrel
while U.S. crude was last at $95.47 per barrel, down 3
percent, the most since November 2012.
A report by industry group Genscape showed a 1 million
barrel rise in stocks at Cushing, Oklahoma, the benchmark
delivery point for U.S. oil futures.
Spot gold climbed 1.5 percent to $1,223.39 an ounce.
The move recouped a few of the losses that made last year gold's
worst in three decades.
Three-month copper rose to its highest level in
seven months but failed to hold above resistance near $7,420 per
ton. It was recently up 0.5 percent at $7,393.
The euro, the strongest-performing major currency in 2013
but historically a weaker performer at the start of a calendar
year, dropped to a two-week low of $1.3634 and last traded 0.7
percent lower at $1.3654.
The dollar rose to its strongest level versus the yen since
October 2008, hitting a high of 105.44 yen, before erasing gains
to trade down 0.5 percent at 104.75 yen.
Against a basket of major currencies, the greenback
rose 0.7 percent -- the most in five months.
"The U.S. dollar has started the year with strength, and a
shift in market dynamics suggests the dollar may continue to
gain versus the euro and other counterparts," said David
Rodriguez, quantitative strategist at DailyFX in New York.
Amid a firming jobs market and brightening economic outlook,
the Federal Reserve said in December it would reduce its monthly
$85 billion bond buying program by $10 billion starting in
Yields on U.S. 10-year paper dipped below 3
percent after hitting a high of 3.04 percent. U.S. Treasuries
prices were up, with investors moving out of stocks after last