* U.S. nonfarm payrolls surprisingly weak in December
* Treasury debt prices gain; S&P 500 ends higher
* China exports miss forecasts, but imports up strongly
* Gold gains while dollar edges lower
By Caroline Valetkevitch
NEW YORK, Jan 10 U.S. government debt prices
jumped while the dollar fell on Friday as weaker-than-expected
jobs growth in December cast some doubt on the U.S. economic
A world equity index rose and the Standard & Poor's 500
index ended up as defensive shares gained on the U.S.
Analysts said the jobs setback was affected by unusually
cold weather and was likely to be temporary, though it was
enough to raise some questions about the next move from the
The report helped support the view the U.S. central bank,
which last month announced it would begin scaling back its
massive stimulus program, will take a gradual approach to
reducing its bond-buying program this year.
"Since economic momentum had seemed to be picking up, there
were real concerns that tapering would become more aggressive
throughout the year - fears that this report has washed away,"
said Alec Young, global equity strategist at S&P Capital IQ in
"People are hoping this is an anomaly, and it seems like it
was related to the weather, but if it is a trend, then that is a
real threat to GDP and corporate earnings growth."
In the U.S. bond market, benchmark 10-year Treasury notes
traded 29/32 higher in price to yield 2.865 percent,
down 10 basis points from late on Thursday. The 10-year note's
yield fell to a session low of 2.8579 percent, the lowest in
over three weeks, after hitting a near 2-1/2-year high of 3.041
percent last week.
U.S. nonfarm payrolls rose just 74,000 in December, the
smallest increase in nearly three years and far below the
196,000 forecast by economists. The unemployment rate fell 0.3
percentage point to 6.7 percent, but this in part reflected
people leaving the labor force.
The central bank announced in December that it would trim
its monthly purchases of bonds to $75 billion from $85 billion,
and many economists had expected it to decide on a similar-sized
cut at its next meeting on Jan. 28-29.
The dollar fell broadly following the jobs report. Against
the yen, the dollar last traded at 104.10 yen, down 0.7
percent and below the session's high of 105.12 yen.
The U.S. dollar index, which measures the greenback
versus six major currencies, was down 0.5 percent.
"It was clearly a disappointing number and the markets are
reflecting that disappointment by selling the dollar across the
board," said Omer Esiner, chief market analyst at Commonwealth
Foreign Exchange in Washington, D.C.
November's payrolls figures were revised higher, however,
and the possibility that winter weather had affected the report
had some investors thinking the December numbers will be revised
later as well.
The MSCI world equity index was up 0.6
percent for the day and up 0.4 percent for the week.
On Wall Street, the Dow Jones industrial average fell
7.71 points or 0.05 percent, to 16,437.05, the S&P 500
gained 4.24 points or 0.23 percent, to 1,842.37 and the Nasdaq
Composite added 18.471 points or 0.44 percent, to
The S&P 500 utilities index, up 1.4 percent, led
gains, following by health care, up 0.4 percent.
Shares of Alcoa Inc fell 5.4 percent to $10.11 a day
after the company reported a massive quarterly loss. Alcoa's
results were hurt by recent declines in aluminum prices and a
non-cash impairment charge on smelter acquisitions.
For the week, the S&P 500 rose 0.6 percent, while the
Nasdaq climbed 1 percent. The Dow Jones industrial average
finished the week down 0.2 percent.
GOLD, OIL GAIN
Gold rose 1.5 percent for the day and notched a third
consecutive weekly gain after the disappointing U.S. jobs data.
Spot gold edged up to $1,245.58 an ounce. For the
week, gold was up almost 1 percent, rising a third consecutive
week, its longest weekly winning streak since August.
Oil futures also rose, reversing two days of losses, as
traders covered short positions ahead of the weekend and as
reports of production problems at a major U.K. oilfield fueled
In New York, oil gained $1.06 to settle at $92.72.
Brent crude oil futures rose 86 cents to settle at
$107.25 a barrel.
ECB PARTS WAYS WITH FED, CHINA EYED
In contrast to the Fed, the European Central Bank has kept
holding out the prospect of yet more stimulus.
On Thursday, ECB President Mario Draghi underlined his
determination to act should deflation become a real risk or
rising money rates threaten a fragile recovery.
European stocks closed up 0.4 percent, boosted by a
string of strong corporate updates.
Asian markets were soggy overnight after China trade data
proved mixed. While exports grew a little less than expected at
4.3 percent in December from a year earlier, imports easily
outpaced forecasts with an increase of 8.3 percent.
The jump in imports could point to stronger domestic demand
and a rebalancing away from a reliance on exports to fuel
growth, a sea change long desired by policymakers everywhere.