* U.S. shares dip on cloudy tech outlook, jobs trepidation
* Sterling, euro fall against dollar
* Bank of England, ECB keep rates unchanged
* BoE unexpectedly extends bond purchases
By Daniel Bases
NEW YORK, Aug 6 (Reuters) - Caution crept back into U.S.
stock markets on Thursday a day ahead of the July unemployment
report and as a cautious outlook from technology bellwether
Cisco Systems cast a chill, but European shares rose on
soothing earnings results.
A surprise move by the Bank of England to expand its bond
buying program by 50 billion pounds, a measure known as
quantitative easing, also supported European stocks, driving up
financial shares.
The BoE's move, however, along with its decision to hold
interest rates at a record low 0.50 percent pushed down
sterling against the dollar by more than 1 percent.
The dollar also rose off multi-month lows against the euro
after the European Central Bank left its record-low benchmark
interest rate unchanged at 1.0 percent.
The stronger dollar contributed to losses in U.S. crude oil
after it topped $72 a barrel, a one-month high.
A better-than-expected weekly U.S. jobless claims report
pushed up stocks in early trade, but concerns about the July
jobs report ate away at investor resolve.
"Obviously, everyone looks at the employment number as
potentially market moving, so there could be a little
trepidation ahead of that report," said Todd Salamone, vice
president of research at Schaeffer's Investment Research in
Cincinnati, Ohio.
Comments by the chairman of Cisco Systems Inc <CSCO.O>, the
world's largest network equipment manufacturer that is
considered a technology bellwether, that it is too soon to call
a recovery also hurt sentiment. A semiconductor index <.SOXX>
closed down 1.32 percent, but Cisco shares bounced back from
early losses to close up 0.6 percent to $22.29. []
The Dow Jones industrial average <> fell 24.71 points,
or 0.27 percent, to 9,256.26. The Standard & Poor's 500 Index
<.SPX> lost 5.64 points, 0.56 percent, to 997.08. The Nasdaq
Composite Index <> dropped 19.89 points, or 1 percent, to
1,973.16.
The Labor Department reported initial U.S. weekly jobless
claims fell by 38,000 to a seasonally adjusted 550,000 in the
week ended Aug 1. []
July non-farm payrolls data is due Friday. A Reuters survey
forecasts the number of newly jobless in July at 320,000, which
would be the least for any month since September. <ECI/US>
MARKETS DIVERGE
In Europe, financial stocks led European share indexes
higher.
The FTSEurofirst 300 <> index of top European shares
closed up 0.43 percent at 934.47 points. The index is up 14 out
of the last 19 sessions and stands 45 percent above its record
low in March. However it is still down 43 percent from a 2007
multi-year peak.
"Over the last month, people have become more convinced
that some sort of a recovery is on its way and a second wind
has come into the market," said Andrew Bell, head of research
at Rensburg Sheppards.
"I don't think that it's about to win a gold medal for a
sprint, but at least the economy is off the injury list and
shows signs of convalescing," he added.
But some questioned the markets' ability to sustain a rally
that is being helped by the central bank's quantitative
easing.
"In the short-term, QE will be good for markets. But the
longer-term question of what happens when stimulus stops or
(is) even withdrawn, it may not be quite positive and that's a
question for another day," said Peter Dixon, UK economist at
Commerzbank.
The MSCI all-country world index <.MIWD00000PUS> fell from
earlier highs to a loss of 0.2 percent. However the index is up
over 56 percent from its March lows.
Tokyo shares closed at a 10-month high, with automakers
such as Honda Motor Co. <7267.T> leading way on hopes the U.S.
government will extend its popular "cash-for-clunkers"
car-buying program with another $2 billion.
In credit markets, Treasury prices finished slightly lower
as optimism from the better-than-expected weekly jobs data
offset the safe-haven flows caused by weaker stocks.
The benchmark 10-year U.S. Treasury note <US10YT=RR>
slipped 4/32 of a point in price, pushing the yield up to 3.764
percent. Bond prices move inversely with yields.
Euro zone government bond prices dropped and the Schatz
yield hit a six-week high, after getting caught in a tug-of-war
between the BOE-inspired rally and disappointment from the
European Central Bank president, Jean-Claude Trichet.
Comments by Trichet that he saw the recession bottoming out
and inflation turning positive before year end were taken
negatively by bond investors. ((ECB Trichet highlights, see
[]))
The 10-year Bund yield <EU10YT=RR> rose 2.5 basis points to
3.372 percent. The two-year Schatz yield <EU2YT=RR> was flat at
1.47 percent, after scaling its highest level since late June
of 1.517 percent.
The euro <EUR=> was down 0.37 percent at $1.4355 while the
the dollar rose 0.50 percent against the yen at 95.38 <JPY=>.
Sterling traded down 1.18 percent to $1.6781 <GBP=>.
U.S. light sweet crude oil <CLc1> settled down 3 cents, or
0.04 percent, to $71.94 per barrel, and spot gold prices <XAU=>
gained $1.10, or 0.11 percent, to $963.05.
(Additional reporting by Rachel Chang, Jeremy Gaunt, George
Matlock, Dominic Lau, Brian Gorman, Tamawa Desai and Angela
Moon; Editing by Leslie Adler)
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http://blogs.reuters.com/globalinvesting; for the MacroScope
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