(Adds close of European markets)
* Dollar slips to 7-month low on weaker jobs data
* World stocks gain for 7 weeks, longest streak since 2010
* Oil slips as U.S. climate-pact exit compounds glut fears
* US, British, German stock indices at record highs
By Herbert Lash
NEW YORK, June 2 The U.S. dollar fell to
seven-month lows on Friday after data showed the U.S. economy
created fewer jobs than expected in May, but equity investors
shrugged off the news, lifting leading American, British and
German stock indices to fresh records.
U.S. job growth slowed last month and employment gains in
the prior two months were not as strong as previously reported,
suggesting the labor market was losing momentum despite the
unemployment rate falling to a 16-year low of 4.3 percent.
The lackluster job growth data lifted gold prices to a near
six-week peak as the report lowered expectations for the Federal
Reserve to raise interest rates later this year after a hike
that most analysts still anticipate later in June.
Nonfarm payrolls increased 138,000 in May as the government,
manufacturing and retail sectors lost jobs, the Labor Department
said. The U.S. economy created 66,000 fewer jobs than previously
reported in March and April.
Still, investors continue to give both the economy and
President Donald Trump's administration the benefit of the
doubt, said Michael Arone, chief investment strategist at State
Street Global Advisors in Boston.
"Should we see the earnings begin to decline, I do think the
market will have trouble," he said.
The market has priced in a global growth rebound, though
skepticism on the part of bond investors, a tepid market for
small-capitalized stocks and a downward drift in oil prices
point to sluggish growth, low inflation and low rates, he said.
"The rest is kind of this noise, the monetary policy, what's
going on in DC," Arone said, referring to Washington.
MSCI's all-country world stock index hit a
new record, rising 0.62 percent, on track to post a seventh
straight week of gains, its longest winning streak since 2010.
Financial stocks in Britain lifted the FTSE 100
index of top UK blue chips to all-time peaks while Germany's DAX
index also set new highs. Both later trimmed gains
closed the day higher.
On Wall Street, the three major U.S. indices set intraday
highs. The Dow Jones Industrial Average rose 76.47
points, or 0.36 percent, to 21,220.65. The S&P 500 gained
8.98 points, or 0.37 percent, to 2,439.04 and the Nasdaq
Composite added 52.95 points, or 0.85 percent, to
The greenback fell to seven-month troughs against euro and
Swiss franc, while sliding from a one-week high versus the yen.
Analysts said the less rosy jobs data was unlikely to derail
the Fed from raising interest rates this month.
"A hike in June is still on the table but the news flow will
have to improve for the Fed to keep tightening in the second
part of the year," said Thomas Julien, U.S. economist, at
Natixis North America in New York.
The dollar index, tracking the unit against key foreign
currencies, fell to a seven-month low and was last down 0.44
percent at 96.774
The euro was 0.50 percent higher against the dollar to
$1.1267. Against the yen, the dollar fell from
one-week highs and last changed hands at 110.51 yen, down 0.75
Brent crude dipped below $50 and headed for a second week of
losses on worries Trump's decision to abandon a climate pact
could spur U.S. drilling and worsen a global oil glut.
Benchmark Brent crude futures were off 50 cents at
$50.13 a barrel. U.S. West Texas Intermediate crude
futures fell 52 cents to $47.84 per barrel.
Long-dated U.S. Treasury yields fell to nearly seven-month
lows while short-dated yields touched their lowest in more than
two weeks after the U.S. employment data suggested a cautious
Fed policy beyond June.
U.S. 10-year Treasuries rose 14/32 in price to
push their yields down to 2.1678 percent.
Spot gold rose 0.89 percent to $1,276.50 an ounce,
its highest since April 25, headed for its fourth week of gains.
(Editing by Bernadette Baum)