September 2, 2014 / 8:31 PM / 3 years ago

GLOBAL MARKETS-Dollar jumps after U.S. data; bond prices slide

* Strong U.S. manufacturing, construction data strengthen
    * Euro hits 1-year low vs dollar on ECB bets, yen at year
    * Stocks slip as tumbling oil prices pull down energy sector

 (Adds close of U.S. markets)
    By Herbert Lash
    NEW YORK, Sept 2 (Reuters) - The dollar rose to its highest
this year against the yen on Tuesday on strong U.S.
manufacturing and construction data, while the euro slipped to a
12-month low on speculation the European Central Bank will move
toward looser monetary policy.
    U.S. oil prices fell more than $3 a barrel, leading shares
in the energy sector to account for almost half the decline in
the S&P 500. Volume was light and the S&P closed slightly lower.
    U.S. manufacturing hit a nearly 3-1/2 year peak in August
and construction spending rebounded strongly in July, the latest
signs of U.S. economic vigor. 
    The data lifted the dollar almost 0.8 percent against the
Japanese yen, pushing it above the 105 yen mark for the first
time since the first week of this year. The dollar last traded
at 105.10 yen, up 0.72 percent on the day.
    U.S. Treasuries fell further on the data, with
the 10-year note off 21/32 in price to yield 2.4211
    The euro sagged in early trade on bets ECB President
Mario Draghi will do more to help a wobbly euro zone economy.
But the currency later recouped its losses, up 0.01 percent at
    Investors are waiting to see what Draghi does when ECB
policymakers meet on Thursday, said Ken Polcari, director of the
NYSE floor division at O'Neil Securities in New York.
    "If (the market) becomes disappointed on Thursday because
Draghi does not announce something more accommodative or
stimulative, then you'll see European markets under pressure and
flow over into the U.S. markets, at least temporarily," he said.
    Few investors expect immediate, major steps but most see
looser ECB policy in the future as the euro zone fails to grow
due to austerity measures and conflict in Ukraine.
    MSCI's all-country world index of 45
countries fell 0.1 percent while the pan-European FTSEurofirst
300 index, which has risen nearly 7 percent from its
mid-August low, closed down 0.07 percent at 1,375.93.
    Wall Street closed mixed after a choppy trading session in
which the economic data failed to drive prices much.
    "The market is probably pricing in stronger numbers on the
economic side but it's still very much positive," said James
Liu, global market strategist at JPMorgan Funds, in Chicago. 
    "We are expecting to see stronger economic numbers, the
market is certainly expecting that, and as long we get them we
can do quite well above 2,000 on the S&P 500," Liu said.
    The Dow Jones industrial average closed down 30.89
points, or 0.18 percent, at 17,067.56 and the S&P 500 
fell 1.09 points, or 0.05 percent, to 2,002.28. But the Nasdaq
Composite rose 17.92 points, or 0.39 percent, to
    Brent crude fell almost to $100 a barrel, pressured by
worries about slowing oil demand growth in China and Europe, a
strong U.S. dollar and ample supplies.
    Brent crude for October delivery settled down $2.45
at $100.34 a barrel. U.S. crude fell $3.08 from Friday's
close to settle at $92.88 a barrel. There was no trading in the
United States on Monday because of the Labor Day holiday.

 (Reporting by Herbert Lash; Additional reporting by Marc Jones
in London; Editing by Meredith Mazzilli, Dan Grebler and Chizu

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