September 6, 2019 / 3:14 PM / 17 days ago

GLOBAL MARKETS-Risk appetite dampened by lackluster U.S. jobs growth

* U.S. jobs data disappoints

* Wall Street stocks see nominal gains

* The dollar edges lower

* Crude prices drop, still on track for weekly gain

* Remarks from Fed chair Jerome Powell eyed (Updates to U.S. market open, changes dateline (previously LONDON), changes byline)

By Stephen Culp

NEW YORK, Sept 6 (Reuters) - Wall Street eked out gains on Friday and the dollar lost ground as a weaker-than-expected U.S. jobs report tempered investor sentiment on the heels of China’s announced economic stimulus plan.

The week began with a flight to safety driven by trade jitters and weak U.S. manufacturing data, but positive geopolitical developments in Britain, Hong Kong and Italy, along with news that U.S.-China trade talks would continue, put market participants in a risk-on mood.

That mood was given a further boost after China’s central bank said it would lower the amount of cash that banks must hold as reserves, resulting in additional liquidity to the tune of 900 billion yuan ($126.35 billion) in an effort to fortify the nation’s ebbing economy.

But risk appetite was curbed after the U.S. non-farm payrolls report showed an increase of 130,000 jobs in August, fewer than analysts expected.

The underwhelming data provided another possible sign that longest-ever period of U.S. economic expansion is losing steam and increased the likelihood that the Federal Reserve will cut interest rates when it meets later this month.

“It was a generally weak report,” said Bill Merz, head of fixed income research at U.S. Bank Wealth Management in Minneapolis. “The U.S. labor market has been the last line of defense amid softening global economic data and we can’t read too much into any single report, but this is one more piece of evidence that the Fed is behind the curve.”

“Wage gains and hours worked were a silver lining,” Merz added. “But that hasn’t led to higher inflation or inflation expectations yet, which is what the market really needs to see.”

Market participants now look to remarks by Jerome Powell, as the Fed chair takes part in a panel about the economy and monetary policy in Zurich, which begins at 12:30 p.m. EDT (1630 GMT).

The Dow Jones Industrial Average rose 62.75 points, or 0.23%, to 26,790.9, the S&P 500 gained 5.37 points, or 0.18%, to 2,981.37 and the Nasdaq Composite added 4.58 points, or 0.06%, to 8,121.41.

News of China’s economic stimulus sent European and emerging markets stocks higher.

The pan-European STOXX 600 index rose 0.19% and MSCI’s gauge of stocks across the globe gained 0.28%.

Emerging market stocks rose 0.54%. MSCI’s broadest index of Asia-Pacific shares outside Japan closed 0.65% higher, while Japan’s Nikkei rose 0.54%.

U.S. Treasury yields dropped on the weak payrolls report, but strong wage gains cushioned the fall.

Benchmark 10-year note prices and yields were essentially flat.

The 30-year bond last rose 10/32 in price to yield 2.0406%, from 2.054% late on Thursday.

The dollar turned lower against a basket of currencies following the U.S. jobs report and ahead of Powell’s remarks.

The dollar index fell 0.15%, with the euro up 0.1% to $1.1044.

The Japanese yen strengthened 0.13% versus the greenback at 106.83 per dollar, while sterling was last trading at $1.2315, down 0.11% on the day.

Oil prices dropped following the jobs report, but remained on track for a weekly gain on rising hopes for a resolution in the U.S.-China trade war.

U.S. crude fell 1.92% to $55.22 per barrel and Brent was last at $60.03, down 1.51% on the day.

Gold inched higher on the heels of weaker-than-expected labor market data.

Spot gold added 0.1% to $1,521.01 an ounce.

Copper lost 0.27% to $5,829.00 a tonne.

Three-month aluminum on the London Metal Exchange rose 0.17% to $1,787.00 a tonne. (Reporting by Stephen Culp; additonal reporting by Marc Jones and Kate Duguid; Editing by Steve Orlofsky)

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