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GLOBAL MARKETS-Shares slide before U.S. jobs data
September 4, 2015 / 8:48 AM / in 2 years

GLOBAL MARKETS-Shares slide before U.S. jobs data

* Europe shares drop 2 percent before U.S. jobs report
    * Euro edges up after hitting two-week low vs dollar
    * Asia shares down for seventh straight week, worst run
since 2011
    * Oil sags back to $50 a barrel but up for second week

    By Marc Jones
    LONDON, Sept 4 (Reuters) - World shares slid towards their
fourth weekly loss in the last five on Friday, as a boost from a
supportive-sounding European Central Bank gave way to caution
before U.S. jobs data.
    Concerns about China consigned Asian shares 
to a seventh straight weekly loss and Europe's markets fell 2
percent after rising almost 2.5 percent on Thursday.
    "Markets are worried about a too strong U.S. job report
which could spark the Fed into hiking rates in September," said
Philippe Gijsels, head of research at BNP Paribas Fortis Global
Markets.
    Wall Street was set to follow suit, with index futures
 pointing to a fall of 1.1 percent in the S&P 500.
    Thursday's gains in Europe were driven by ECB President
Mario Draghi saying the bank was prepared to expand its 1
trillion euro stimulus programme aimed at lifting growth and
inflation in the euro zone. 
    But Friday's focus was on whether U.S. jobs data due at 1230
GMT would keep the Federal Reserve on track to raise its record
low interest rates later this year.
    Economists polled by Reuters expect the U.S. economy to have
 produced 220,000 new jobs last month, continuing the robust
employment creation of the past five years. Average hourly
earnings are predicted to have risen by 0.2 percent, as they did
in July. 
    A strong reading will keep alive chances that a first Fed
hike in almost a decade could come this month. Following a tough
last month for global markets however, markets now see December
or early next year as more likely.
    "We were until recently firm Septemberists but now it's very
much on a knife edge," said Luke Bartholomew at Aberdeen Asset
Management in London.
    "Market volatility has shaken them (Fed policymakers)
somewhat ... so seeing that markets are very fragile, do they
want to shock them with hiking now? I think that is a very live
debate now."
    In the foreign exchange markets, the dollar fell 0.8 percent
against the yen to 119.10 as the safe-haven Japanese
currency capped a third week of gains. 
    The euro was fractionally stronger at $1.1130 having been
driven to a two-week low of $1.10875 and a four-month low
against the yen by Draghi's talk of more money
printing. 
    The ECB also cut its growth and inflation forecasts and
warned of possible further fallout from China. Coupled with a
potential delay to a Fed move, euro zone bond yields fell
further on Friday, with German 10-year yields,
hitting their lowest level in nearly a week at 0.69 percent. 
    "Fundamentally market reaction to U.S. data can be
short-lived. In the medium-term perspective ECB QE matters more
than U.S. non-farm payrolls so we think the bias is bullish for
(German) Bunds," said BNP Paribas strategist Patrick Jacq.
   
    
    CRISIS PROPORTIONS
    Strains in Asia stayed close to the surface despite hard-hit
Chinese markets being closed for a second day for a holiday.
    MSCI's broadest index of Asia-Pacific shares outside Japan
 chalked up its worst weekly losing streak since
2011 as it ended down 0.9 percent on the day and more that 4
percent on the week.
    Japan's Nikkei fared even worse. It fell 2.5 percent
on the day and 7 percent for the week as it slumped to a
seven-month low.
    There was so sign of relief for the region's emerging market
currencies either. 
    Bank Negara Malaysia was spotted intervening to stem the
ringgit's weakness as confidence continued to be hit by a 
corruption scandal swirling round Prime Minister Najib Razak.
    The Institute of International Finance warned the current
slump in emerging market stocks -- down 40 percent since April
 -- and currencies had now reached "crisis proportions"
 
    In commodities markets, which have been battered by fears of
a hard landing in China, trade remained highly volatile. 
    Brent crude slipped 0.4 percent to $50.47 per barrel
although it was clinging to a second week of modest gains. 
    Copper fell 1.6 percent to $5,160 per tonne after
surging to $5,314 on Thursday, a more than three-week high, as
investors closed out positions before the U.S. jobs data.

 (Additional reporting by Nichola Saminather and Hideyuki Sano
in Singapore and Tokyo; Editing by Toby Chopra)

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