* Wall St tumbles; S&P closes below its 50-day moving
average for first time since April
* Dollar adds to monthly gain on strong U.S. labor market
* Traders eye U.S. nonfarm payrolls data for July
By Angela Moon
NEW YORK, July 31 Global equity markets tumbled
on Thursday, hurt by ongoing tensions with Russia and
Argentina's second default in 12 years, while the U.S. dollar
edged higher against a basket of major currencies for its
strongest monthly gain in over a year.
Wall Street was hit hard, with the Dow and the S&P 500
posting their first monthly decline since January, while the
Nasdaq fell for a third month in the last five.
The benchmark S&P 500 index closed below its 50-day moving
average for the first time since April 15 and posted its biggest
one-day percentage decline since April 10. The moving average is
viewed as a sign of short-term momentum, and selling accelerated
after the level was breached.
"It's getting pretty ugly," said Peter Kenny, chief market
strategist at Clearpool Group in New York.
"This is really a blending of several geopolitical themes
that are driving that risk-off trade. Whether it is
Ukraine/Russia crisis, whether it is Israel/Gaza, whether it is
Argentine default - you pick the theme, but if you put them all
together - it is providing the type of headwind that is making
people more inclined to take money off the table than put it to
The Dow Jones industrial average fell 317.06 points,
or 1.88 percent, to end at 16,563.3. The S&P 500 lost
39.4 points, or 2 percent, to 1,930.67 and the Nasdaq Composite
dropped 93.13 points, or 2.09 percent, to 4,369.77.
MSCI's All-World Index was down 1.5 percent
and European shares fell 1.2 percent.
Russia banned soy imports from Ukraine and may restrict
Greek fruit and U.S. poultry, Russian news agencies reported on
Thursday, in what could be responses to new Western sanctions.
Separately, Argentina defaulted for the second time in 12
years. Investors had hoped for a midnight deal with holdout
creditors, but the plan fell through. Even a short default will
raise companies' borrowing costs, add to pressure on the peso,
drain dwindling foreign reserves and fuel one of the world's
highest inflation rates.
Most U.S. Treasuries were steady, overcoming earlier price
losses, as investors sought lower-risk debt for month-end
U.S. government debt has weakened since gross domestic
product data on Wednesday showed a strong rebound in the second
quarter from a weak start to the year.
That extended into Thursday morning as data showed U.S.
labor costs recorded their largest increase in more than 5-1/2
years in the second quarter, a sign that a long-awaited
acceleration in wage growth was imminent. Debt prices
stabilized, however, as some investors shifted out of stocks and
into bonds to adjust month-end balance sheets.
Benchmark 10-year notes were little changed to
yield 2.56 percent, after earlier rising as high as 2.61
percent, the highest since July 8.
The U.S. dollar index, which measures the dollar
against a basket of six major currencies, was last up 0.03
percent at 81.460. The index posted its biggest monthly gain in
nearly 1-1/2 years, rising more than 2 percent in July.
(Reporting by Angela Moon; Editing by Dan Grebler)