Dollar off after data, stocks flat; Greek vote eyed

Thu Jul 2, 2015 4:44pm EDT
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By Rodrigo Campos

NEW YORK (Reuters) - The U.S. dollar index fell from a three-week high on Thursday as a weaker than expected U.S. payrolls report lowered chances of a U.S. interest rate hike come September, while Wall Street and world stock markets ended little changed after a volatile week.

Bank shares were hit the most in New York on the expectation of lower rates for longer, while utilities, favored when Treasuries yield relatively low rates, outperformed.

Across the Atlantic, Greece was headed to a referendum on Sunday that could decide its future in the euro zone. The effect on financial markets was viewed as mixed, with some analysts saying it will have little influence, though they acknowledge it is ultimately unknown.

Days after Greece defaulted on part of its IMF debt, the Fund said Greece needs an extra 50 billion euros over the next three years, including 36 billion from its European partners, to stay afloat. It also needs significant debt relief.

U.S. payrolls increased 223,000 last month, shy of expectations, and 60,000 fewer jobs were created in April and May after revisions. At least 432,000 people dropped out of the labor force.

The Federal Reserve has indicated participation and wage growth are key for its assessment of the health of the labor market. Both were soft in Thursday's report.

The Dow Jones industrial average .DJI fell 27.8 points, or 0.16 percent, to 17,730.11, the S&P 500 .SPX lost 0.64 points, or 0.03 percent, to 2,076.78 and the Nasdaq Composite .IXIC dropped 3.91 points, or 0.08 percent, to 5,009.21.

Despite the nearly flat moves on Thursday, the S&P 500 posted its largest weekly loss, 1.2 percent, since the last week of March. U.S. markets will not be open on Friday in observance of the Independence Day holiday.   Continued...

Traders work on the floor of the New York Stock Exchange in New York, United States, July 2, 2015. REUTERS/Brendan McDermid