Global stocks, euro slide as U.S. jobs data drives global fear

Fri Jul 6, 2012 5:28pm EDT
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By Barani Krishnan

NEW YORK (Reuters) - Stocks fell, the euro hit a two-year low against the dollar and oil slumped more than 3 percent on Friday after disappointing U.S. jobs growth reinforced worries the American economy was mired in a slow-growth rut.

The U.S. Labor Department reported that employers created only 80,000 jobs in June, far fewer than needed to bring down the 8.2 percent unemployment rate and adding to evidence that Europe's debt crisis was weighing on global growth.

Although the jobs creation was weaker than expected, many investors said it was not bad enough to spur the Federal Reserve to launch a third round of quantitative easing.

"This isn't disappointing enough for QE3, but it suggests an extended period of sluggish growth and limited improvement on the jobs front," said Eric Teal, who helps oversee $4.5 billion as chief investment officer at First Citizens Bancshares Inc in Raleigh, North Carolina.

Though Fed action might cheer some investors, many doubt the ability of central banks to lift the economic gloom. More than two-thirds of companies traded on both the New York Stock Exchange and Nasdaq fell.

Commodities prices tumbled as the jobs data fueled worries about the global economy and the demand for raw materials. In addition to the slump in oil prices, copper lost 2 percent and gold 1 percent, pushing the 19-commodity Thomson Reuters CRB index .CRB to its worst performance since December 15.

U.S. and German government bond prices jumped as investors sought safe havens.

The U.S. jobs data came a day after the European Central Bank cut interest rates, further dampening the euro's appeal, and China and the Bank of England announced more monetary easing.   Continued...

Traders work on the floor of the New York Stock Exchange, July 6, 2012. REUTERS/Brendan McDermid