Stocks slide on grim U.S. jobs report

By Herbert Lash

NEW YORK (Reuters) - U.S. stocks fell about 3 percent and oil prices plunged the most in seven years on Wednesday after surprisingly large job losses and a sharp rise in crude inventories reminded investors that the U.S. economy still faces stiff head winds.

The dollar fell, reversing sharp gains against the euro and yen earlier this week, as the steep job losses in the U.S. private sector reignited fears of a deep recession.

A disappointing revenue outlook from technology bellwether Intel Corp (INTC.O) and Alcoa Inc's (AA.N) plans to cut more than 15,000 jobs, halve capital spending and sell businesses also heightened concerns about the severity of the recession.

While separate data showed planned layoffs at U.S. firms eased in December from the previous month's seven-year high, they were still up 275 percent annually as the 12-month-old recession cuts a wide swathe through the U.S. economy.

But a report from ADP Employer Services that said U.S. private employers shed a more-than-expected 693,000 jobs in December, up from a revised 476,000 jobs lost the previous month, sent the most shivers through financial markets, also helping to drive down European stock markets on fears about the global economy.

The ADP report foreshadows likely grim employment data for December from the U.S. Labour Department on Friday and underscored the challenges facing President-elect Barack Obama to revive the economy with a $775 billion (£513 billion) stimulus package.

"The ADP report reinforces the view that things could get worse than expected and we're already expecting a long period of weakness," said Meg Browne, a currency strategist, at Brown Brothers Harriman in New York.

Recession fears were heightened after Intel, the world's biggest maker of semiconductor chips, issued its second revenue warning for the fourth quarter since November, citing weakening demand for personal computers.