Global stocks, euro fall before U.S. jobs data

Saturday, 3 September 2011 00:01 - - {{hitsCtrl.values.hits}}

Reuters) - World stocks slipped on Friday as European shares snapped a four-day rally, while government bonds in Europe climbed, with investors bracing for U.S. jobs data that could reinforce concerns the world’s biggest economy is losing momentum.

Signs that Greece will miss its 2011 deficit target of 7.6 percent underscored concerns about the euro zone debt crisis, prompting investors to lighten their risky assets.

The U.S. employment report, due at 1230 GMT, is expected to show an increase of 75,000 jobs, down from 117,000 in July.

“I think the job figures are going to be worse than expected. It could be a wake up call for the market and share prices could go down even further,” said Koen De Leus, strategist at KBC Securities in Brussels.

“Expectations of QE3 (another round of quantitative easing) have helped shares in the past days, but at the end of the day, the market needs a better economic environment that stimulates growth and company results.”

MSCI’s world equity index lost 0.6 percent. It was still on track for a second consecutive weekly gain after a volatile August that pushed the benchmark index to an 11-month low at one point.

European stocks fell 1 percent after rising so far this week, while emerging stocks dropped 0.6 percent following a five-day rally.

U.S. crude oil was down 0.3 percent at $88.60 a barrel.

Bund futures rose 43 ticks, supported by weak demand at this week’s Italian and Spanish debt sales and dismal manufacturing figures on Thursday.

A senior government official told Reuters on Thursday that Greece expects its 2011 budget deficit to reach 8.1 to 8.2 percent of GDP, missing a 7.6 percent target, while its EU and IMF lenders see an even bigger shortfall and are pressing for more reforms.

Italy, a recent victim of a debt market sell-off, is hesitating in passing austerity measures, and questions remain over how long European Central Bank forays in the secondary debt markets can keep Italian and Spanish yields in check.

Finland’s demands for collateral in exchange for financial aid have raised worries that the second Greek bailout could be derailed, and some members of German Chancellor Angela Merkel’s coalition have threatened to oppose key new powers proposed for the euro zone bailout fund in a parliamentary vote on Sept. 29.

The euro lost a quarter percent to a three-week low of $1.4207.

The dollar rose 0.2 percent against a basket of major currencies.