U.S., European shares flat after U.S. data; oil falls

Thu Sep 1, 2016 4:31pm EDT
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By Sam Forgione

NEW YORK (Reuters) - U.S. and European stocks ended mostly flat and the dollar fell on Thursday after a report showing weakness in U.S. manufacturing last month weighed on shares as investors eyed Friday's monthly U.S. jobs data, while oil prices tumbled.

The Institute for Supply Management said its index of national factory activity fell to 49.4 in August, below expectations of economists polled by Reuters for a dip to just 52.0. It was the first contraction in manufacturing since February.

The data hurt sentiment amid an already nervous investor environment ahead of Friday's U.S. employment report for August. Federal Reserve Vice Chair Stanley Fischer said last week that the central bank would consider the jobs data when discussing when to next raise interest rates.

Employers are expected to have added 180,000 jobs in August, according to a Reuters poll of economists.

The benchmark U.S. S&P 500 .SPX fell as much as 0.7 percent after the ISM data before stabilizing. The tech-heavy Nasdaq .IXIC rose, boosted by Charter Communications (CHTR.O: Quote), which gained 4.5 percent.

The weak U.S. ISM data also stifled European shares. Stocks in the region had earlier climbed to two-week highs.

"The ISM data was, in a word, disappointing," said Peter Kenny, senior market strategist at Global Markets Advisory Group in New York. "It has forced investors to reconsider the landscape, not go blindly into the narrative that spells out a certainty about interest rates being bumped up in September.

"Oil prices extended Wednesday's declines, with the market focused for a second straight day on U.S. government data showing a rise in U.S. crude stocks in the latest week.   Continued...

Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., August 31, 2016.  REUTERS/Brendan McDermid