September 2, 2014 / 3:20 PM / 3 years ago

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

* Strong U.S. manufacturing, construction data streghthen
    * Euro hits 1-year low vs dollar on ECB bets, yen also falls
    * Stocks little changed as investors await EBC policymakers

 (Adds U.S. market opening, byline, dateline; previous LONDON)
    By Herbert Lash
    NEW YORK, Sept 2 (Reuters) - The dollar jumped to its
highest this year against the yen on Tuesday, lifted by strong
U.S. economic data, while the euro slipped to a one-year low on
speculation the European Central Bank will move toward looser
monetary policy when it meets later this week.
    U.S. manufacturing activity rose to its highest level in 
nearly 3-1/2 years in August and construction spending rebounded
strongly in July, in the latest signs of the U.S. economy's
    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. 
    U.S. Treasuries slumped on the data, with the
10-year note falling 18/32 in price to yield 2.4104.
    The euro sagged on bets the ECB will do more to help
a wobbly euro zone economy.
     "Even if Draghi doesn't announce rate cuts or QE (asset
purchases), I think he will open doors to further significant
action further down the road and that should be enough to
support the market at least for now," said Nick Stamenkovic, a
strategist at RIA Capital Markets in Edinburgh.
    Global equity markets and European shares edged lower before
the ECB's meeting. Few investors expect major steps but most see
looser policy in the future as the euro zone fails to grow
thanks to austerity measures and conflict in Ukraine.
    MSCI's all-country world index of 45
countries fell 0.08 percent while the pan-European FTSEurofirst
300 index, which has risen nearly 7 percent from its
mid-August low, edged down by 0.04 percent to 1,376.28 points.
    Wall Street was little changed.
    The Dow Jones industrial average fell 7.67 points, or
0.04 percent, to 17,090.78. The S&P 500 rose 0.49 points,
or 0.02 percent, to 2,003.86 and the Nasdaq Composite 
added 13.55 points, or 0.3 percent, to 4,593.82.
    "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.
    Brent crude fell below $102 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 was down 98 cents
at $101.81 a barrel. U.S. crude was down $1.28 from
Friday's close at $94.68 a barrel. There was no trading in the
United States on Monday because of the Labor Day holiday.

 (Additional reporting by Marc Jones in London; reporting by
Herbert Lash; Editing by Meredith Mazzilli)
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