* Stocks slip after softer-than-expected US job report
* Euro at nearly four-month low on European debt concern
* Foreclosure ruling saps finance shares
(Updates with U.S. midday trading)
By Al Yoon
NEW YORK, Jan 7 (Reuters) - The euro fell to its lowest in
nearly four months against the dollar as investors braced for
upcoming bond sales from the more debt-stricken euro zone
countries.
Global equities struggled, meantime, as U.S. jobs growth in
December fell short of lofty expectations and cooled some of
the optimism fueling rallies since November.
U.S. non-farm payrolls increased by 103,000 in December,
the government said, compared with a Reuters poll that forecast
175,000 new jobs last month. However, the jobless rate fell to
9.4 percent, its lowest in more than 1-1/2 years, and the U.S.
revised up the payroll numbers for October and November. For
details, see []
"You can't ignore the fact that, regardless of a
disappointing payrolls outcome, U.S. growth is still looking
better than Europe, and the euro sovereign stress is still
there," said Richard Franulovich, senior currency strategist at
Westpac in New York.
The Dow Jones industrial average <> fell 43.40 points,
or 0.37 percent, to 11,653.91. The Standard & Poor's 500 Index
<.SPX> declined 5.33 points, or 0.42 percent, to 1,268.52 and
the Nasdaq Composite Index <> skidded 10.83 points, or
0.40 percent, to 2,699.06.
Bank shares led Wall Street lower after a court ruling
voided some foreclosures in a move that may set a dangerous
precedent for the sector. Shares of Wells Fargo & Co., a
defendant in the case, fell 3.1 percent to $31.15.
Europe's FTSEurofirst 300 <> dropped 0.2 percent,
with selling accelerating after the U.S. data.
World stocks measured by MSCI All-Country World Index
<.MIWD00000PUS> edged lower by 0.4 percent for its third
straight decline. Japan's Nikkei average <> edged up 0.1
percent to an eight-month high.
The dollar rose, also taking its cue from revisions in the
U.S. jobs report that seemed to underscore that a broader
economic recovery was intact. This compares with lingering
skepticism over the ability of some euro zone nations to calm
creditors, and mixed data from regional stalwart Germany.
Germany's trade surplus narrowed in November as imports
gained more than expected, a sign of rising domestic demand in
the face of other data showing declines in retail sales and
industrial output. See [].
Earlier, investors sold bonds of the most indebted euro
zone governments before a series of issues next week. A
European Union proposal that could force those who lend to
banks to bear big losses if they fail also helped knock the
single currency lower across the board. []
Portugal, widely seen as the next euro zone state that
could need a bailout after Greece and Ireland, will lead debt
auctions from European nations next week. []
Risk premiums on Portugal's 10-year government bonds over
benchmark German Bunds <PT10YT=TWEB><DE10YT=TWEB> rose 15 basis
points to 4.33 percentage points, while those on 10-year
Spanish bonds <ES10YT=TWEB> over Bunds widened. The five-year
cost of insuring Portugal's debt against default rose by 15
basis points to 540 basis points.
"The rising yields at debt auctions in the euro zone will
continue to spook investors for a while, and it's best to stay
away from peripheral stocks such as Spanish and Portuguese
banks until mid-year, when the crisis should ease," said Arnaud
Scarpaci, fund manager at Agilis Gestion in Paris.
The U.S. currency climbed 0.25 percent against a basket of
major currencies <.DXY>.
The euro <EUR=> slid 0.55 percent to $1.2930. Against the
Japanese yen, the dollar <JPY=> fell 0.42 percent at 82.99.
Many analysts said markets had become so upbeat on the
payrolls that there was room for disappointment. Some pointed
to a note of caution from new U.S. claims for jobless benefits,
which rose more than expected last week.
U.S. Treasury debt gained after the employment report
fanned hopes the U.S. Federal Reserve will stick to an
ultra-easy monetary policy.
Benchmark 10-year Treasury note yields declined 0.07
percentage point to 3.33 percent, erasing some of the increase
that followed signs of economic recovery since October.
In commodities, copper recovered from <CMCU3> a two-week
low earlier in the session on talk that top consumer China may
be preparing to tighten monetary policy.
U.S. light sweet crude oil <CLc1> rose 30 cents, or 0.34
percent, to $88.68 per barrel, and gold <XAU=> rose $1.15, or
0.08 percent, to $1372.10.
(Additional reporting by Anirban Nag, William James, Atul
Prakash, Dominic Lau and Pratima Desai in London, and Gertrude
Chavez-Dreyfuss and Rodrigo Campos in New York, Editing by
Chizu Nomiyama)
