* Stocks down as US employment, manufacturing dive
* US Treasuries yields below 3 pct, first time since Dec
* Dollar rebounds from four-week low against euro
* Gold also up on safe-haven bid, oil dips by up to 2 pct (Corrects name of jobs surveyor ADP, paragraph 7)
By Barani Krishnan
NEW YORK, June 1 (Reuters) - Investors fled U.S. stock markets on Wednesday and poured into Treasuries after dismal U.S. economic data, driving benchmark yields to below 3.0 percent for the first time since December.
The dollar initially fell to a four-week low versus the euro as the employment and manufacturing reports for May suggested U.S. growth was slowing more quickly than first thought. The greenback rebounded on profit-taking in the euro, joining currency safe-havens such as the yen and Swiss franc.
Oil prices
"The sugar high that has buoyed the U.S. economy over the past six months is wearing out, and there is little in economic growth or foundation to show for it," said Douglas Borthwick, a managing director with Faros Trading in Stamford, Connecticut.
Yields on benchmark 10-year U.S. Treasury debt, the favorite asset of investors looking for a safe place to store cash in tough times, hit December lows, hovering at around 2.96 percent.
Growth in the U.S. manufacturing sector slowed sharply in May, with the Institute for Supply Management's index of national factory activity falling to 53.5 in May, its lowest level since September 2009. For more, see: [ID:nOSL016366]
That followed a report from payrolls processor ADP Employment Services that showed poorer job growth in the private sector than expected, leading many Wall Street banks to slash forecasts for Friday's non-farm payrolls figure from the government.
ADP's report showed employers added a scant 38,000 jobs, nearly four times below that expected by the market.
The U.S. Labor Department will release its payroll numbers for May on Friday. A Reuters poll on Wednesday put payrolls at 150,000 versus an earlier forecast of 180,000.
NEXT FOCUS ON FRIDAY JOB NUMBERS
Some analysts, like David Lutz at Stifel Nicolaus Capital Markets in Baltimore, said some traders were talking about a "whisper number" of about 100,000 new jobs in May,
"If we have a payrolls number with revisions that is anything like the ADP on Friday, then we are going to struggle over the next couple of months," said Jim Paulsen, chief investment officer at Wells Capital Management.
Peter Kenny, managing director at Knight Capital in Jersey City, New Jersey, concurred: "It's not just about jobs. It's about manufacturing, it's about real estate, it's about consumer confidence. This is one data point in a very broad picture, and it's not encouraging."
The Dow Jones industrial average <.DJI> was down 231.29 points, or 1.84 percent, at 12,338.50. The Standard & Poor's 500 Index <.SPX> was down 25.10 points, or 1.87 percent, at 1,320.10. The Nasdaq Composite Index <.IXIC> was down 51.17 points, or 1.80 percent, at 2,784.13.
The euro surged to a four-week high of $1.4458 against the
dollar
While optimism of a second bailout for debt-plagued Greece has helped the euro recover from May's sharp lows, some investors remain worried about the global picture, including the scheduled end this month of a $600 billion U.S. stimulus, known as QE2.
"The euro remains in a kind of no-man's land -- it doesn't want to break much higher but is finding buyers below $1.44," said Greg Salvaggio, vice president of trading at Tempus Consulting in Washington.
Surveys showing factory growth eased in Europe and Asia also sounded a note of caution for investors.
Two surveys showed Chinese factories expanded in May for the 27th straight month, although at a slower pace, suggesting government efforts to curb credit are helping to cool the economy.
In Europe, fresh signs of decline among factories on the euro zone's debt-laden periphery tugged sharply on manufacturing growth across the region as a whole in May. (Additional reporting by Chuck Mikolajczak and Robert Gibbons in New York; Natsuko Waki in London; Editing by Kenneth Barry and Dan Grebler)