(Adds U.S. market prices at midday)
By Herbert Lash
NEW YORK, April 4 (Reuters) - U.S. Treasury debt rallied on
Friday on a safe-haven bid after the biggest monthly decline in
U.S. payrolls in five years, but European and U.S. stocks rose
on hopes the worst of the world economic slowdown may soon
end.
The dollar fell against the euro and yen as volatile
trading hit the equity, energy and currency markets.
Oil prices rose but slipped from the day's peak as worries
about the weakness of the U.S. economy and its impact on energy
demand overshadowed the dollar's declines.
U.S. government bonds rose after data showed U.S. employers
cut payrolls for a third straight month in March while the
unemployment rate jumped to 5.1 percent from 4.8 percent,
stirring speculation of more aggressive interest rate cuts.
It was the first time the U.S. economy shed jobs for three
straight months since a five-month decline in 2003, when the
economy was mired in a jobless recovery from the 2001
recession.
The jobs data was disappointing, but a surge in
economically sensitive stocks in recent weeks suggests
investors believe the worst is close to an end, said Al
Goldman, chief market strategist at Wachovia Securities in St.
Louis.
"I think the market is in a bottoming process, that we've
seen the lows, that bottoms take a while. I think momentum is
up and early weakness would be a buying opportunity," Goldman
said.
Shares on Wall Street switched between negative and
positive but pulled ahead at midday as investors looked beyond
the likelihood the United States was in a recession.
The Dow Jones industrial average <> was up 30.37
points, or 0.24 percent, at 12,656.40. The Standard & Poor's
500 Index <.SPX> was up 7.41 points, or 0.54 percent, at
1,376.72. The Nasdaq Composite Index <> was up 16.07
points, or 0.68 percent, at 2,379.37.
In U.S. Treasury debt trading, the benchmark 10-year
Treasury note <US10YT=RR> gained 27/32 to yield 3.4902 percent.
The 2-year Treasury note <US2YT=RR> rose 4/32 to yield 1.8387
percent.
"The downbeat labor report confirms why consumer confidence
sank so deep this quarter and why the Fed will have to keep
lowering interest rates at their future meetings," said Brian
Fabbri, managing director of economic research at BNP Paribas
in New York.
In currency trading, the dollar was down against a basket
of major trading-partner currencies, with the U.S. Dollar Index
<.DXY> off 0.17 percent at 72.03.
The euro <EUR=> was up 0.27 percent at $1.5722, while
against the Japanese yen, the dollar <JPY=> was down 0.39
percent at 101.88.
European shares closed higher in a volatile session, led by
mining shares and UBS, which is under pressure to break up. But
the surprisingly large fall in U.S. jobs data tempered gains.
The FTSEurofirst 300 index <> of top European shares
rose 0.4 percent to 1,317.12 points, pushing gains for the week
to 4.1 percent, the strongest weekly performance in over a
year.
UBS <UBSN.VX> was among the top gainers, rising 3.3
percent, after former Chief Executive Luqman Arnold pushed to
have the Swiss bank broken up.
Euro zone government bond prices rose, pushing most yields
lower, after the U.S. jobs data helped to raise prospects of
another interest rate cut.
Earlier, Japan's Nikkei stock average <> slid 0.7
percent, although it ended the week up 3.7 percent, its third
successive week of positive finishes.
Oil rose after the U.S. unemployment numbers triggered
falls in the dollar, whose weakness has boosted oil and other
dollar-denominated commodities as investors pour money into
those assets to hedge against inflation.
U.S. light sweet crude oil <CLc1> rose $2.02, or 1.95
percent, to $105.85 per barrel.
Spot gold prices <XAU=> in New York rose $3.30, or 0.37
percent, to $906.20.
(Additional reporting by Chris Reese and Nick Olivari in New
York and Amanda Cooper, Margaret Orgill and George Matlock in
London; Editing by Dan Grebler)
