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GLOBAL MARKETS-Stocks, oil plunge as US jobs report shocks

Published 06/03/2011, 09:52 AM
Updated 06/03/2011, 09:56 AM

* Equities, commodities dive as US jobs report shocks

* S&P 500 down 1 pct to 6-week low, oil prices fall 2 pct

* Dollar tumbles against yen, Swis franc

* US Treasury yields dip again to Dec lows of below 3 pct (Recasts lead, updates to U.S. markets; changes byline, dateline, previous LONDON)

By Barani Krishnan

NEW YORK, June 3 (Reuters) - Global stocks and oil prices slid on Friday after U.S. jobs growth for May fell shockingly below market expectations, heightening worry that the world's top economy was headed for a protracted slowdown.

The dollar tumbled against the yen and Swiss franc, traditionally seen as the currency market's safe havens. U.S. Treasuries prices shot up -- pushing yields back to December lows -- as goverment data showed the United States added the smallest number of jobs since September.

Wall Street's benchmark S&P 500 index <.SPX> slumped 1 percent to a six-week low in response to the monthly employment report, the latest in a batch downbeat data issued over the past few weeks.

"This highly disappointing report is a real shocker," said Mohamed El-Erian, co-chief investment officer at Pimco, the largest U.S. bond manager, in Newport Beach. California.

"It confirms that America has an unemployment crisis that involves worrisome economic, political and social dimensions. It is hard to find any silver lining in today's worrisome report. It speaks to a large unemployment problem that is becoming increasingly structural, and therefore protracted, in nature."

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Global stocks, measured by MSCI's world equity index <.MIWD00000PUS>, fell 0.2 percent. European shares <.FTEU3> slid almost 1 percent.

Oil prices plunged about 2 percent in both New York and London on worries that any further erosion of the U.S. labor market could hit consumer spending, leading to lower fuel use. <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^

Graphic on key economic and cyclical indicators

http://r.reuters.com/pad89r ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^

The Labor Department said the U.S. jobless rate rose to 9.1 percent in May as high energy prices and the effects of Japan's earthquake bogged down the economy.

The closely watched nonfarm payrolls increased 54,000 last month. Private employment rose 83,000, the smallest amount since June, while government payrolls dropped 29,000.

Economists polled by Reuters had expected payrolls to rise 150,000 and private hiring to increase 175,000 in May. The government revised employment figures for March and April to show 39,000 fewer jobs created than previously estimated.

The Dow Jones industrial average <.DJI> was down 113.71 points, or 0.93 percent, at 12,134.84. The Standard & Poor's 500 Index <.SPX> was down 12.70 points, or 0.97 percent, at 1,300.24. The Nasdaq Composite Index <.IXIC> was down 32.46 points, or 1.17 percent, at 2,740.85.

The benchmark 10-year U.S. Treasury note was up 20/32, with the yield at 2.9587 percent.

Ten -year Treasury yields

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