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NEW YORK (Reuters) - Global stocks and the euro fell on Wednesday after data showed U.S. companies hired the fewest people in seven months in April and the euro zone's factory sector slipped further.
The reports came a day after an index of U.S. factory activity posted its strongest growth rate in 10 months and sent the Dow Jones industrial average to its highest close in four years.
The S&P 500 and the Dow declined as investors turned cautious ahead of Friday's U.S. nonfarm payrolls report for April, while government debt prices advanced on safe-haven demand.
U.S. companies added only 119,000 jobs last month, well short of expectations of 177,000, a worrisome sign of a labor market that has struggled to gain traction.
"If fewer and fewer people are participating in this recovery it suggests underlying weakness that we have to address, and so far policymakers' answers have been 'easy credit' - I think we need to go beyond that," said Jack Ablin, chief investment officer at Harris Private Bank in Chicago.
The ADP jobs report followed more discouraging economic news from Europe. Euro zone factories sank further into decline last month, with the downturn hitting Italy and Spain hard and appearing to take root among core members France and Germany.
The Dow Jones industrial average .DJI ended down 10.75 points, or 0.08 percent, at 13,268.57. The Standard & Poor's 500 Index .SPX was down 3.51 points, or 0.25 percent, at 1,402.31. The Nasdaq Composite Index .IXIC added 9.41 points, or 0.31 percent, at 3,059.85.
The MSCI world equity index .MIWD00000PUS fell 0.3 percent to 328.35. European shares erased early gains, with the FTSEurofirst 300 .FTEU3 ending down 0.4 percent.
The euro fell for a third straight session against the dollar and was last down 0.6 percent at $1.3155.
A rush to safety pushed yields on German two- and five-year debt to record lows of seven basis points and 0.549 percent respectively. Ten-year yields touched a record low of 1.599 percent, according to Reuters data.
German Bund futures hit a record high of 141.83.
The ECB meets on Thursday, with pressure growing on the bank to use bond buying and other measures to shield weaker euro members from additional pain. Expectations are also growing that the ECB may soon cut borrowing costs, eroding the euro's interest rate advantage.
"The deterioration in the euro area data will increase the focus on tomorrow's ECB meeting as market participants focus on policymakers' outlooks and weigh the probability of a policy response," said Eric Theoret, currency strategist, at Scotia capital in Toronto.
Elections in Greece and France this weekend added to fears of rising political uncertainty in Europe, which could push the euro below $1.30 in coming weeks.
Against the yen, the dollar rose 0.1 percent to 80.13 yen.
Oil prices dipped, pressured by data showed rising inventories as weak economic data from the United States and Europe dampened the demand outlook. Brent crude for June slipped $1.46 to settle at $118.20 a barrel and U.S. crude for June was down 94 cents to settle at $105.22.
Gold retreated toward $1,653 an ounce but remained within its recent ranges as the mixed signals on global growth kept investors sidelined.
Benchmark 10-year Treasury notes traded up 6/32 in price to yield 1.9225 percent.