World stocks, oil fall on recovery fears

Thu May 3, 2012 4:49pm EDT
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By Herbert Lash

NEW YORK (Reuters) - Global stocks and crude oil fell on Thursday after data showing tepid growth in the U.S. services sector raised concerns about the economic recovery a day before a highly anticipated labor market report for April.

Stocks turned lower, government debt pared losses and the U.S. dollar trimmed gains against the yen after the Institute for Supply Management said its services sector index fell to 53.5 in April from 56.0 the previous month.

The report missed economists' forecasts of a reading of 55.5, according to a Reuters survey. A reading above 50 indicates expansion in the sector.

Fears that the labor market recovery was stalling eased a bit on Thursday after data showed the number of Americans filing new claims for jobless aid fell more than expected last week. The Labor Department said initial claims for state unemployment benefits dropped 27,000 to a seasonally adjusted 365,000.

The mixed data put traders on the defensive before Friday's payrolls report, which is expected to show a further slowdown in hiring last month.

"The real game changer is tomorrow so the market is just taking a breather," said Justin Hoogendoorn, an interest-rate strategist at BMO Capital Markets in Chicago.

Wall Street moved lower on the ISM report after hovering near break-even after the open. Weak retail sales data also weighed on U.S. stocks. According to Thomson Reuters data, 52.9 percent of retailers missed monthly same-store sales expectations for April.

The Dow Jones industrial average .DJI closed down 61.98 points, or 0.47 percent, at 13,206.59. The Standard & Poor's 500 Index .SPX fell 10.74 points, or 0.77 percent, at 1,391.57. The Nasdaq Composite Index .IXIC lost 35.55 points, or 1.16 percent, at 3,024.30.   Continued...

The Japanese Yen's exchange rate against the U.S. Dollar (C), which is displayed on an electronic board, is reflected on rain drops on the window of the board outside a brokerage in Tokyo May 2, 2012. Asian shares rose and the dollar recovered against the yen on Wednesday after strong U.S. factory activity data raised hopes that the world's biggest economy remained on a recovery track while growth in Asian manufacturing improved broader sentiment. REUTERS/Kim Kyung-Hoon