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Dollar slides and shares rally after weak US jobs data

The dollar slid to a two-year low against the euro and global equity markets rose for a fifth session yesterday after weak US jobs data reinforced expectations the Federal Reserve will keep its easy-money policy intact into 2014.

The S&P 500, a benchmark for US stocks, set an intraday record high, while US Treasuries yields fell to the lowest levels in three months on the highly anticipated labour market report.

Nonfarm payrolls increased by 148,000 in September, the Labour Department said in a report delayed by the 16-day shutdown of the federal government. The total was well below economists’ estimates of 180,000 new jobs.

Data for August was revised to show more positions created than previously reported, but revisions to the July figures showed employment gains that were the weakest since June 2012.

Economists and market analysts said the tepid pace of US job growth supported the decision by the Fed’s policy-setting Federal Open Market Committee in September to not begin to pare its purchases of $85 billion a month in bonds to bolster the economy. “Today’s underperforming jobs number fully justifies September’s cautious FOMC,” said Joseph Trevisani, chief market strategist at WorldWideMarkets in Woodcliff Lake, New Jersey. “Dollar bulls will be discomfited but equities will find the economic logic invigorating.”

Stocks rose on Wall Street, in Europe and elsewhere in the Americas after the jobs report. The euro jumped and the dollar index slipped, while government debt prices rose on both sides of the Atlantic, pushing yields lower.Equities later pared gains, and the technology-rich Nasdaq composite index briefly slipped into negative territory.

MSCI’s all-country stock index, which tracks stocks in 45 countries, rose 0.67 per cent to levels last seen in January 2008. The FTSEurofirst 300 of leading European shares rose 0.54 percent to close at 1,288.06.

On Wall Street, the Dow Jones industrial average was up 68.35 points, or 0.44 per cent, at 15,460.55. The Standard & Poor’s 500 Index was up 9.15 points, or 0.52 per cent, at 1,753.81. The Nasdaq Composite Index was up 6.67 points, or 0.17 per cent, at 3,926.71.

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