* Weaker-than-expected ISM report adds to emerging market
* Wall Street, European stocks fall more than 1 percent
* U.S. Treasury yields at lows last seen in November
* Dollar slips on weak ISM reading
By Herbert Lash
NEW YORK, Feb 3 A weaker-than-expected report on
U.S. factory activity pushed global equity markets and the
dollar lower on Monday, undermining investor sentiment already
under pressure from concerns about emerging markets.
U.S. stock indices added to losses, the dollar fell to its
lowest against the Japanese yen since late November and the
yield on the benchmark 10-year U.S. Treasury note fell to its
lowest since early November after release of the ISM factory
MSCI's all-country world equity index fell
0.72 percent while the pan-European FTSEurofirst 300 index
of leading regional shares closed down 1.5 percent.
MSCI's emerging markets index fell 0.9 percent to its
lowest since August, a decline that was less of a fall than
U.S. manufacturing grew at a substantially slower pace in
January as new order growth plunged by the most in 33 years,
driving overall factory activity to an eight-month low, the
Institute for Supply Management said.
ISM's index of U.S. factory activity fell to 51.3 last month
- its lowest since May - from a revised 56.5 in December. The
reading was well below a median forecast of 56 in a Reuters poll
of economists. Readings above 50 indicate expansion.
Stocks on Wall Street fell 1 percent at one point and gold
prices rose about 1.6 percent as the ISM reading rattled
investors, even as European manufacturers enjoyed a solid start
to the year.
Slower growth in the Chinese goods-producing sectors,
coupled with the U.S. data, raised concern about the global
"The data was very weak across the board, it's hard to find
any good news in there. It looks like a general slowdown, though
you don't know how much of this is weather-related," said Paul
Zemsky, head of asset allocation at ING Investment Management in
New York, referring to the ISM report.
"Combine that with the fact emerging market currencies
continue to sell off, and things don't look too good for the
market now," he said. "Somewhere between now and 1,700 (on the
S&P) there's a big buying opportunity, but people need to see
some stability in emerging currencies."
The Dow Jones industrial average fell 116.5 points,
or 0.74 percent, to 15,582.35. The S&P 500 lost 13.53
points, or 0.76 percent, to 1,769.06 and the Nasdaq Composite
dropped 37.073 points, or 0.9 percent, to 4,066.805.
The dollar index, a basket of currencies, fell 0.26
percent to 81.100 and the euro gained against the dollar 0.17
percent 1.310. The dollar fell 0.66 percent to 101.36 yen.
U.S. Treasuries yields fell to their lowest since early
November, with the 10-year note rising 11/32 in
price to yield 2.624 percent.
"Overall this is a weak number and it does suggest some
dramatic slowing in economic activity," said Millan Mulraine,
deputy head of U.S. research and strategy at TD Securities in
New York, about the ISM report.
"One can put most of this down to the unseasonably cold
weather that we've had over the past two months, we've seen that
in other economic reports. The big question is whether that
proves to be temporary and we think that it will," he said.
Russia's ruble steadied above recent five-year lows
after PMI data showed Russian manufacturing shrinking for the
third month in a row. The Turkish lira was little changed
after a report showed consumer prices in Turkey rose sharply in
January, driven higher by surging food prices.
Gold for April delivery rose 1.7 percent to $1,261
Brent crude oil dropped to a two-week low below $106 a
barrel as weak factory data from China stoked concerns about
demand, but violence in Iraq and Syria limited the fall.
Brent slipped 73 cents to $106.07 a barrel by 1453
GMT, having sunk to $105.70 in earlier trade. U.S. oil
fell 96 cents to $96.53.