LONDON, Sept 4 (Reuters) - U.S. stock futures fell and the dollar was little changed on Friday after data showed the U.S. economy created fewer jobs than expected last month, though the unemployment rate fell to a 7-1/2-year low.
Non-farm payrolls increased 173,000 in August as the manufacturing sector lost the most jobs since July 2013, after an upwardly revised 245,000 rise in July, the Labor Department said.
It was the smallest gain in employment in five months although it was enough to nudge the unemployment rate down to 5.1 percent from 5.3 percent in July.
“It was a fairly mixed report, but I don’t think it gives the Fed the support they were possibly looking for to make September the first hike, said Russell Price, senior economist at Ameriprise Financial Services Inc in Troy, Michigan.
“One way to put, it’s a report that provides the Fed with enough caution as it does confidence.”
The dollar index, which measures the greenback against a basket of currencies, initially dipped after the number before levelling off. It was last down 0.1 percent but marginally higher than before the data was released.
U.S. stock index futures were last down 1.6 percent having been down about 1.1 percent before the data.
The FTSEurofirst 300 index of top European shares initially cut losses just after U.S. jobs data but then fell back further. It was down 2.6 percent at 1,390 points by 1300 GMT.
U.S. Treasury yields rose, with two-year notes last yielding 2.15 percent, down 1.7 basis points, compared with 2.13 percent earlier.
Sterling rose immediately against the dollar after the data, but quickly gave up those gains to hit a three-month low of $1.5206, down 0.3 percent on the day. (Reporting by Nigel Stephenson, editing by Marc Jones)