* Payrolls increase 209,000 in July, less than expected
* Expectations of early interest rate hike had hit stocks
* US Treasuries yields drop, gold bounce back
By Blaise Robinson
PARIS, Aug 1 Shares trimmed losses and the
dollar dipped on Friday after the U.S. reported job growth
slowed more than expected in July and the unemployment rate
unexpectedly rose, easing worries that interest rates will rise
U.S. Treasuries yields dropped, with benchmark 10-year notes
last up 2/32 in price to yield 2.55 percent, down
from 2.58 percent before the jobs data was released, while gold
bounced back from a recent slide.
The Labor Department said on Friday nonfarm payrolls
increased by 209,000 last month after surging by 298,000 in
June, missing economists' expectation of an increase of 233,000
"The number was a fairly big miss, but it means the
Americans may hold off a little bit longer from raising rates,"
said Joe Neighbour, trading analyst at London-based firm Central
While encouraging for the global economy at large, the
prospect of strong job numbers had fuelled expectations the Fed
would raise rates soon. The U.S. central bank's ultra-loose
monetary policy has helped drive a two-year rally in equity
U.S. stock index futures trimmed losses
after the data. The FTSEurofirst 300 index of top
European shares was down 0.9 percent, partly recovering from a
1.3 percent loss before the data was released. The MSCI
All-Country World index was down 0.4 percent.
The dollar, which had been hovering just below a 10-month
high against a basket of currency earlier on Friday,
dipped after the data.
Despite the lower-than-expected jobs data, investors
remained cautious. A strong U.S. GDP figure earlier this week
and conflict in Ukraine and the Middle East were keeping them on
"The market now believes the Fed will move sooner rather
than later, and the momentum is turning against the 'safe play
of being long equities'," said Steen Jacobsen, chief investment
officer at Saxo Bank, in Copenhagen.
Those views got some confirmation when Dallas Federal
Reserve Bank President Richard Fisher told a television
interviewer it was "very possible" the Fed would start raising
rates early next year if the economy kept improving. Speaking on
CNBC on Friday, Fisher declined to specify when he expects the
Fed to move.
In addition, the threat of a conflict between Russia and
Ukraine appears to be affecting the euro zone economy. A survey
showed on Friday the region's manufacturing growth easing in
"The slowdown from the confidence peak earlier this year is
noticeable," Christian Schulz, senior economist at Berenberg
Bank in London. "Especially in Germany, it reflects the Putin
factor, which has aggravated the problems of an already troubled
The cautious mood was also felt in the bond market, where
yields on the riskier Spanish and Italian bonds
Portuguese bond yields also rose on Friday,
amid expectations Lisbon will bail out the country's biggest
bank after it reported massive losses.
Brent crude oil lost ground, as oversupply in the
Atlantic basin and low demand outweighed worries over political
tensions in the Middle East, North Africa and Ukraine.
(Additional reporting by Sudip Kar-Gupta in London; Editing by