Summary Dismal US jobs report sank dollar and Wall Street stocks and cut short a rally on European bourses.
NEW YORK (AFP) - A dismal US jobs report sank the dollar and Wall Street stocks and cut short a rally on European bourses on Thursday as it heightened worries about weak international growth.
The smallest monthly job creation tally in nearly six years took a looming rate hike by the Federal Reserve off the table, probably until September or later, according to analysts.
The US added only 38,000 net new positions in May, a quarter of the amount expected, clearly catching the Fed off guard after top officials had repeatedly said a June or July rate increase was in the cards.
While continued low rates is good news to many, it hit hard the shares of banks amid expectations their lending margins will be narrowed. Citigroup lost 3.4 percent and Bank of America 3.5 percent
Even so, overall losses on the US markets were small. The S&P 500 ended 0.3 percent lower and the Dow fell 0.2 percent.
The US report reversed a rally in Europe that followed firm gains in Asian markets. Frankfurt and Paris both fell 1.0 percent. But London managed a rise of 0.4 percent, helped by gains in commodities and energy stocks thanks to the weaker dollar.
"Just as US investors were getting used to the idea that we were going to see some form of rate rise in the next two months, this jobs number has thrown that into serious doubt," said analyst Michael Hewson at CMC Markets.
"If this slowdown continues it raises the question as to whether we ll see a rate rise at all this year."
But some saw the slowdown as likely temporary, reflecting caution after the slowness of the US economy and stock markets at the beginning of the year.
"This report is a temporary rate-hike killer, but we believe strongly that it will prove to be a blip rather than a change in the trend," said Ian Shepherdson of Pantheon Macroeconomics.
The jobs report hit the US dollar hard. The greenback lost 2.0 percent to $1.1364 per euro and 2.1 percent at 106.63 yen.
Gold added 2.8 percent at $1,246.50 an ounce, while oil prices, which had held up despite the inaction of OPEC in its meeting Thursday, fell modestly, with Brent crude losing 40 cents to close at $49.64.
The pound, which fell sharply earlier in the week on uncertainty over the coming Brexit vote, clawed back some ground against the dollar on Friday.
Prime Minister David Cameron on Thursday urged Britons not to "roll a dice" by voting to leave the European Union on June 23 in his first television grilling of the referendum campaign.
