Shares fall after U.S. jobs data; short-dated U.S. yields fall

By Sam Forgione

NEW YORK (Reuters) - Stock markets worldwide dipped on Friday after April U.S. employment data showed the fewest jobs added in seven months, adding to concerns over economic growth, while short-dated Treasury yields sank.

Nonfarm payrolls increased by 160,000 jobs last month, far below the 202,000 economists polled by Reuters had forecast on average. The number cast doubts on whether the Federal Reserve will raise interest rates before the end of the year.

U.S. interest rates futures suggested traders see a 7-percent chance of the Fed raising rates at its June 14-15 meeting , down from 14 percent on Thursday, Reuters data showed. (FEDWATCH)

U.S. and European shares weakened after the jobs data. In Europe, hedge fund Man Group (EMG.L) was among the worst performers, down 8.6 percent after Citigroup cut its rating on the stock to "sell" from "buy."

U.S. two-year (US2YT=RR) Treasury note yields briefly fell to their lowest levels in 12 weeks, at 0.686 percent, after the jobs report discouraged some views of a June Fed rate hike. Short-dated Treasuries are considered most vulnerable to Fed interest rate increases.

"It's a disappointing number," said Russell Price, senior economist at Ameriprise Financial Services in Troy, Michigan. "It does show businesses are more concerned about the economic outlook. Demand has been soft, so businesses are responding to that."

MSCI's all-country world equity index was last down 0.25 percent, at 394.42. The index was on track to post its biggest weekly percentage decline since early February.

The Dow Jones industrial average (.DJI) was last down 14.99 points, or 0.08 percent, at 17,645.72. The S&P 500 (.SPX) was last down 5.24 points, or 0.26 percent, at 2,045.39. The Nasdaq Composite (.IXIC) was down 18.16 points, or 0.39 percent, at 4,698.93.

Europe's broad FTSEurofirst 300 index (.FTEU3) was last down 0.29 percent, at 1,303.08.

Longer-dated Treasury yields rose on signs of wage growth, with 30-year yields last at 2.618 percent after dropping to a more than two-week low of 2.568 percent. Average hourly earnings rose 0.3 percent in April after a weak reading for March.

Oil prices erased early losses as the dollar dipped. Brent crude (LCOc1) was last up $0.53, or up 1.18 percent, at $45.54 a barrel. U.S. crude (CLc1) was last up $0.51, or up 1.15 percent, at $44.83 per barrel.

The dollar recouped much of its losses tied to the U.S. job data. The dollar index, which measures the greenback against six major currencies, was last down 0.1 percent at 93.696 (.DXY). It had fallen as much as 0.6 percent shortly after the data.

"It doesn't bode well for global growth," said Charles St-Arnaud, currency strategist at Nomura Securities International in New York, on the jobs data. "The Fed most likely won't be able to hike rates in June."

(Additional reporting by Dion Rabouin and Richard Leong in New York; Editing by Nick Zieminski)