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European shares dip on U.S. jobs data, but bond yields rise

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A broker looks at financial information on computer screens on the IG Index the trading floor in London, Britain February 6, 2018. REUTERS/Simon Dawson/File Photo

LONDON, Sept 3 (Reuters) - European shares extended falls with a widely watched gauge of banking shares briefly dipping 1% on Friday after data showed U.S. jobs growth in August missed estimates, fuelling fears that bets of a robust economic recovery may be overdone.

Job growth slowed more than expected in August amid a softening in demand for services and persistent worker shortages as COVID-19 infections soared.

The weakness in U.S. data rippled across world markets with non-dollar currencies - including the British pound and the Australian dollar - perking up in afternoon London trading.

Bitcoin rose to its highest since mid-May, up around 3% at $50,745.

The pan-European stock index was last down 0.5% (.STOXX), although European banking stocks (.SX7P) clawed back from initial falls and last traded a touch firmer on the day.

The weakness in the data comes at a time when U.S. policymakers have begun debating when to start scaling back massive monthly bond buying purchases.

Some analysts said they expected that decision may be delayed after the data miss.

"With the Fed’s message being that it requires “substantial progress” being made in restoring employment to pre-pandemic levels before considering a change in the current monetary stance, today’s numbers suggest that discussions on tapering may be delayed for a while yet," said Stuart Cole, head macro economist at London-based Equiti Capital.

In bond markets, eurozone bond yields rose across the board, tracking U.S. Treasuries, after the payroll data was released.

Germany's 10-year Bund yield, the benchmark for the bloc, was up 1.5 bps and its 30-year Bund yield hit a six-week high at around 0.14%, up 2 bps on the day .

August jobs
Reporting by London Markets Team; Writing by Saikat Chatterjee; Editing by Karin Strohecker and Dhara Ranasinghe

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