NEW YORK: The dollar slipped against the euro and global equity markets rebounded on Friday after data showed US jobs growth slowed in August, raising the prospect that interest rates will stay low longer than investors had expected.
The dollar fell after data showed US nonfarm payrolls grew by only 142,000 last month, far below the 225,000 forecast by analysts in a Reuters poll. The July figure was revised upward to 209,000.
Major US stock indexes pared losses to move into positive territory, while Germany's DAX and Spain's IBEX rebounded to close higher. MSCI's all-country index of performance in 45 countries cut losses to trade flat. Investors took the surprisingly weak jobs data as a sign the Federal Reserve will not boost rates any time soon.
"One of the big fears of this market, maybe the only fear, has been rapidly rising interest rates. This puts an end to those thoughts in the near term," said Rick Meckler, president of hedge fund LibertyView Capital Management LLC in Jersey City, New Jersey.
Mohamed El-Erian, chief economist at Allianz in Newport Beach, California, said although the payrolls report was disappointing, it was more solid in key components, such as improvement in the unemployment rate to 6.1 percent.
"All this will reinforce the Federal Reserve's 'steady as she goes' policy approach," El-Erian said. The Dow Jones industrial average rose 44.09 points, or 0.26 percent, to 17,113.67. The S&P 500 added 6.37 points, or 0.32 percent, to 2,004.02 and the Nasdaq Composite gained 10.43 points, or 0.23 percent, to 4,572.72.
In Europe, the FTSEurofirst 300 index of top regional shares pared losses to close down 0.35 percent at 1,396.02. MSCI's all-country index was off 0.02 percent.
The dollar retreated from a nearly six-year high against the yen and the euro recovered from a 14-month low against the greenback a day after a surprise European Central Bank rate cut.
The euro edged up 0.1 percent against the dollar at $1.2957 after shedding 1.6 percent on Thursday, its steepest fall in almost three years, after the ECB cut rates to record lows to avert deflation.
On the EBS trading system, the dollar last traded down 0.23 percent at 105.02 yen after it touched a nearly six-year high of 105.71 yen in Asian trading.
Yields on Italian, Irish and Spanish bonds hit all-time lows in a broad-based rally in euro zone debt spurred by the ECB's rate cuts and openness to a large-scale bond-buying program. The 10-year US Treasury note cut gains to trade slightly lower, and lifting yields to 2.4497 percent.
Brent crude oil fell below $101 a barrel as a strong dollar depressed demand and the jobs data report suggested the US economy was growing more slowly than expected.
Oil prices on both sides of the Atlantic had fallen on Thursday as the ECB rate cut led to a spike in the dollar, making it more expensive for holders of other currencies to buy the dollar-denominated commodity. Brent settled down $1.01 at $100.82 a barrel. US crude fell $1.16 to settle down at $93.29 a barrel.
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