Global stocks and crude oil fell on Monday as investors reacted to the surprisingly sharp slowdown in U.S. jobs growth reported last week, which raised concerns about the strength of the world's largest economy.
Stocks on Wall Street and crude oil futures prices slid about 1 percent on the first trading day after the U.S. Labour Department reported the March jobs data. U.S. equity markets were closed on Friday for the Good Friday holiday.
The government reported that just 120,000 jobs were added in March, far below market expectations for 203,000 new jobs and the smallest increase since October.
Trade was light, as major markets in Europe as well as some markets in Asia, including Australia and Hong Kong, were closed on Monday.
In afternoon trade stocks pared losses, as did crude futures, while gains in safe-haven government debt were reined in, suggesting investors were starting to shrug off the jobs data.
We have reacted to the weak unemployment numbers, and now we are shifting focus to earnings, especially the banks later in the week, said Paul Nolte, managing director of Dearborn Partners in Chicago.
The Dow Jones industrial average <.DJI> closed down 130.55 points, or 1.00 percent, at 12,929.59. The Standard & Poor's 500 Index <.SPX> fell 15.88 points, or 1.14 percent, at 1,382.20. The Nasdaq Composite Index <.IXIC> slid 33.42 points, or 1.08 percent, at 3,047.08.
MSCI's all-country world equity index <.MIWD00000PUS> slipped 0.7 percent to trade near lows last seen a month ago.
The labour market report raised concerns about whether the U.S. economy is strong enough to boost growth elsewhere in the world as Europe's debt crisis resurfaces and worries remain about China's ability to avoid a hard landing.
China on Monday reported a jump in the annual inflation rate in March that topped expectations, rising to 3.6 percent as food prices remained volatile. But economists believe price pressures will moderate over the rest of the year, giving Beijing the flexibility to ease monetary policy to support growth.
U.S. Treasury debt prices rose, reflecting expectations that the U.S. payrolls report increased the chances of a third round of monetary easing measures by the Federal Reserve. But late in the session they trimmed most price gains.
The benchmark 10-year Treasury note was up 1/32 higher in price to yield 2.04 percent.
Trade in U.S. interest rate futures also suggested that investors were betting rates would stay low well into 2014, reflecting the Fed's view on interest rates.
U.S. payroll growth slows: http://link.reuters.com/wej57s
Graphic on US unemployment: http://link.reuters.com/zej57s
Iran sanctions graphic: http://link.reuters.com/qeh85s
China CPI and PPI data: http://link.reuters.com/tek57s
Oil prices pared losses as revived talks on Iran's nuclear program eased fears of supply disruption.
Negotiations between Iran and world powers over Tehran's disputed nuclear program will be held on Saturday in Istanbul. The resumption of talks that collapsed more than a year ago tempered worries about an immediate cut in supply or conflict.
Brent crude settled down 76 cents to $122.67 (77.15 pounds) a barrel. U.S. oil fell 85 cents to settle at $102.46 (64.44 pounds) a barrel.
The euro ground higher against the dollar and the yen, recovering from losses earlier in the session as the effects of the disappointing U.S. jobs data faded, although thin holiday trading exacerbated moves.
There's maybe a bit of a soft tone in the dollar on the jobs report, said Mark McCormick, a G-10 currency strategist with Brown Brothers Harriman, though he noted that price action has been pretty muted.
The euro traded as high as $1.3031 (8196 pence) before more recently trading up 0.1 percent to $1.3111 (8246 pence). The single currency also rose 0.1 percent to 106.94 yen, turning around earlier losses.
Gold broke ranks with other commodities and equities to gain after the U.S. jobs data revived speculation that the Federal Reserve might try to stimulate the economy.
Spot gold prices rose $3.10 (1.95 pounds), or 0.19 percent, to $1641.00 (1,032.08 pounds).
U.S. gold futures for June delivery settled up $13.80 (8.68 pounds) an ounce, or 0.85 percent, at $1,643.90 (1,033.90 pounds).
(Additional reporting by Angela Moon, Luciana Lopez and Robert Gibbons; Editing by James Dalgleish and Leslie Adler)