U.S. job losses sour mood; euro data unlikely to soothe

By Tomasz Janowski

SINGAPORE (Reuters) - Heavy job losses in the United States and Europe soured market sentiment, pointing to a long, slow recovery from the world's deepest recession in eight decades.

Friday's euro zone service sector surveys for June and retails sales for May are unlikely to cheer investors either, with both sets of data expected to show a deterioration from the previous month.

U.S. employers cut more jobs than expected in June, pushing the jobless rate to a 26-year peak of 9.5 percent, while unemployment in Europe in May rose to a 10-year high, Thursday's data showed, scuttling lingering hopes for a quick bounce.

Since the U.S. economy fell into recession in December 2007, it has lost 6.5 million non-farm jobs and the unemployment rate has nearly doubled. Europe's single currency area meanwhile has lost 3.4 million jobs since May 2008 and the jobless rate spiked to 9.5 percent.

World stock markets, which rallied in the second quarter on recovery hopes, slumped after the jobs data as investors found little evidence of a nascent sustainable upturn.

While manufacturing reports from around the world this week pointed to a bottoming of the global recession, economists said jobs and the buying power of consumers remained under threat.

An expected 0.1 percent drop in euro zone retail sales in May and a forecast pick-up in the pace of contraction in the single currency area's dominant service sector are set to add to evidence that the world economy is not yet out of the woods.

The results of the June services survey are due shortly before 9 a.m. British time, while the retail sales data are expected at 10 a.m. British time.