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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.
In Europe, equities erased early gains to close mostly flat after the weak U.S. data and dampened expectations of fresh central bank measures to stimulate growth eclipsed strong company earnings.
The FTSEurofirst 300 index of top regional shares closed up 0.1 percent at 1,044.39 after a choppy session.
MSCI's all-country world equity index .MIWD00000PUS retreated, falling 0.6 percent to 326.49.
The euro rose against the yen and rallied from two-week lows versus the U.S. dollar to trade little changed after European Central Bank chief Mario Draghi gave a more upbeat assessment of the euro zone than expected, reducing expectations for further monetary easing.
Draghi, in comments after the ECB kept rates unchanged at 1 percent, said the euro zone's economy was likely to recover this year, although the outlook remained vulnerable to downside risks. He added that inflation was likely to remain above 2 percent this year.
The U.S. dollar index .DXY was up 0.11 percent at 79.221 while the euro was down 0.05 percent at $1.3148.
But gains in the euro could be short-lived with elections in France and Greece at the weekend.
Oil slipped under $117 a barrel after OPEC said it had opened the taps more to weaken prices.
OPEC said it was unhappy about the likely effect on demand of high prices, while disappointing data helped paint a gloomy outlook for the world economy, reviving concerns about a drop in demand.
Brent crude for June delivery settled down $2.12 at $116.08 a barrel. U.S. crude futures settled down $2.68 at $102.54 a barrel.
Gold fell 1 percent as tumbling oil prices and the weak U.S. service sector data sent bullion prices to their biggest one-day loss in a month. U.S. gold futures for June delivery settled down $19.20 an ounce at $1,634.80.
Government debt pared early losses to trade near break-even.
The benchmark 10-year U.S. Treasury note was unchanged in price to yield 1.93 percent. The 30-year U.S. Treasury bond also was up 2/32 in price to yield 3.11 percent.
Additional reporting by Richard Hubbard in London; Writing by Herbert Lash; Editing by James Dalgleish and Dan Grebler