* Risk assets rally on jobs report, falter on other data
* Dollar rallies versus yen after U.S. jobs data
* U.S. bonds fall sharply, then pare losses on ISM report
* Oil flip-flops, falls after services sector news
(Updates with opening of U.S. markets; changes byline,
dateline; previous LONDON)
By Herbert Lash
NEW YORK, Sept 3 (Reuters) - Stocks jumped and the dollar
rallied on Friday after data showed U.S. job losses were less
than expected in August, the second major report this week to
ease fears the economy would slip back into recession.
However, data on U.S. services companies showed the sector
grew at a rate that was below expectations in August, even as
it rose for an eighth straight month, leading investors to pare
riskier bets.
Crude oil retreated after briefly rising on the jobs
report, and gold prices curbed losses of more than 1 percent to
trade lower on the services sector data.
The U.S. dollar had rallied versus the yen after the U.S.
payrolls report but also trimmed gains after an index of
national services by The Institute for Supply Management fell,
providing a mixed outlook for the economy.
"What we're seeing here is that the recovery continues to
bounce around. This supports our view that we're going to see a
below-average recovery, though the jobs data earlier today made
the case for a double-dip harder to make," said Channing Smith,
vice president of Capital Advisors in Tulsa, Oklahoma.
"Still, the majority of data we've seen points to a slower
recovery," Smith said.
MSCI's all-country world index <.MIWD00000PUS> was up 0.8
percent on the day, and about 3.5 percent for the week -- its
biggest weekly gain since the week ended July 11.
In midmorning, the Dow Jones industrial average <> was
up 52.07 points, or 0.50 percent, at 10,372.17. The Standard &
Poor's 500 Index <.SPX> was up 5.98 points, or 0.55 percent, at
1,096.08. The Nasdaq Composite Index <> was up 14.52
points, or 0.66 percent, at 2,214.53.
U.S. Treasuries and German Bund futures pared losses on
news of U.S. non-manufacturing sector, which lifted demand for
safer haven government debt.
The benchmark 10-year Treasury note <US10YT=RR>, down a
full point earlier in the session, fell 20/32 in price to yield
2.70 percent after the ISM report.
September Bund futures <FGBLc1> rose to 132.02, gaining
around 14 ticks after the release of the data but remained 70
ticks down on the day. []
The safe-haven Japanese yen and Swiss franc weakened while
higher-yielding currencies, such as the Australian dollar,
gained as the employment report fanned expectations the U.S.
labor market may not be as weak as many had feared.
Gains, as in other risk assets, were later pared.
The dollar was down against major currencies, with the U.S.
Dollar Index <.DXY> down 0.32 percent at 82.202.
The euro <EUR=> was up 0.28 percent at $1.2861. Against the
yen, the dollar <JPY=> was up 0.06 percent at 84.34.
Oil prices edged into positive territory on the jobs
report, then pared gains to turn lower after the services
sector data.
U.S. light sweet crude oil <CLc1> fell $1.29 to $73.73 a
barrel. Spot gold prices <XAU=> fell $9.60 to $1,241.10 an
ounce.
Asian stocks edged higher before the job report, with
MSCI's regional stock index outside Japan <.MIAPJ0000PUS> up
0.3 percent. Japan's Nikkei <> rose 0.6 percent, but was
still down more than 13 percent for the year.
(Reporting by Wanfeng Zhou, Ellen Freilich in New York;
Kirsten Donovan, Atul Prakash and Jan Harvey in London; Writing
by Herbert Lash; Editing by Kenneth Barry)
