* U.S., European stocks slide after dismal jobs report
* Dollar falls to 7-week low vs yen, but rises vs euro
* US government debt falls in face of historic low yields
* Crude prices fall to lowest level in almost four years
(Recasts with U.S. markets, changes byline; changes dateline;
previous LONDON)
By Herbert Lash
NEW YORK, Dec 5 (Reuters) - U.S. stocks fell sharply on
Friday in response to a grim U.S. jobs report that sent bond
prices higher in Europe and pushed the price of crude down to
$42 a barrel as prospects for the world's economies darkened.
European shares extended losses in afternoon trade as
investors reeled at U.S. government data showing a loss of
533,000 jobs in November, the weakest performance in 34 years.
Oils and bank stocks led the decline in Europe, while oil
and defense stocks pushed the Dow down in the United States.
The dollar fell to a seven-week low against the yen but
rose against the euro as investors once again sought shelter in
the U.S. currency.
"When you see such a shocking employment number, you
realize the devastating effect that can have on household
demand," said Henk Potts, equity strategist at Barclays
Stockbrokers in London.
Shortly after opening, the Dow Jones industrial average
<> was down 67.30 points, or 0.80 percent, at 8,308.94. The
Standard & Poor's 500 Index <.SPX> was down 6.59 points, or
0.78 percent, at 838.63. The Nasdaq Composite Index <> was
down 10.73 points, or 0.74 percent, at 1,434.83.
The pan-European FTSEurofirst 300 <> index was down 3
percent at 797.26 points.
Euro zone government bond futures extended gains to a fresh
session high, pushing the 10-year cash yield below 3 percent
after the worse-than-expected U.S. jobs report.
The 10-year Bund yield <EU10YT=RR> fell to the session low
of 2.988 percent, down 9 basis points on the day.
However, U.S. government debt prices fell after the dismal
labor report in a sign investors are reluctant to buy
government debt with yields at the lowest in over 50 years.
The benchmark 10-year U.S. Treasury note <US10YT=RR> was
down 19/32 in price to yield 2.62 percent. The 2-year U.S.
Treasury note <US2YT=RR> fell 3/32 in price to yield 0.86
percent.
"We're already at (yield) levels we've never seen before.
It's just difficult to continue buying Treasuries at these
prices," said Kim Rupert, managing director of global fixed
income analysis at Action Economics in San Francisco.
November's job losses were the steepest since December
1974, when 602,000 jobs were shed, Labor Department data
showed, and were much worse than forecast by analysts polled by
Reuters who had predicted a reduction of 340,000 jobs.
The dollar rose against a basket of major currencies, with
the U.S. Dollar Index <.DXY> up 0.61 percent at 87.142. Against
the yen, the dollar <JPY=> fell 0.01 percent at 92.16.
The euro <EUR=> fell 0.66 percent at $1.2686.
U.S. light sweet crude oil <CLc1> was off 54 cents at
$43.13 a barrel, after earlier touching $42 at one point.
Many dealers and analysts expect oil to test the
psychologically important $40 a barrel level fairly soon as
evidence mounts of a significant decline in oil demand in all
the major developed economies.
Spot gold prices <XAU=> fell $13.85 to $751.80 an ounce.
Asian shares edged higher overnight, with the MSCI index of
Asian shares outside Japan <.MIAPJ0000PUS> rose 0.2 percent,
but trimmed gains after the U.S. employment report. The Nikkei
average <> slightly lower, down 0.1 percent.
(Reporting by Ellis Mnyandu, Gertrude Chavez-Dreyfuss and
Chris Reese in New York and Rebekah Curtis, Christopher Johnson
and Ian Chua in London; writing by Herbert Lash; Editing by
Kenneth Barry)
