By Chibuike Oguh and Iain Withers
NEW YORK/LONDON (Reuters) -Global stocks fell on Thursday, weighed by tepid trading in equity markets across the U.S. and other major regions, even as oil prices extended gains amid rising geopolitical tension from the Middle East conflict.
Wall Street’s main indexes pared early gains and were trading slightly down. Data released on Thursday showed rising U.S. jobless claims, indicating labor market softness, but strong service-sector activity. The closely watched nonfarm payrolls report for September is due on Friday.
The Dow Jones Industrial Average fell 0.77% to 41,870.37, the S&P 500 fell 0.50% to 5,681.20 and the Nasdaq Composite fell 0.40% to 17,853.07.
European stocks finished down 0.93% as investors digested weak business activity survey data from the bloc. MSCI’s gauge of stocks across the globe fell 0.59% to 840.49.
Asia-Pacific shares outside Japan had earlier shed 1.3% overnight, largely driven by Hong Kong stocks sagging after a sizzling rally, with several markets, including mainland China and South Korea, closed for the day.
Japan’s Nikkei, however, ended up nearly 2% after the country’s newly elected prime minister Shigeru Ishiba said it was not the time to raise rates after meeting Bank of Japan Governor Kazuo Ueda.
Geopolitical tensions loomed large, after Israel bombed Beirut early on Thursday, following a year of clashes with Iran-backed Hezbollah.
Oil prices gained on Thursday as concerns grew that the conflict could disrupt crude oil flows from the key exporting region, overshadowing a stronger global supply outlook. [O/R]
Brent and U.S. crude futures gained 5% each to $77.48 and $73.65, respectively.
“The fact that energy is up where everything else is down pretty significantly is an indication that today’s move is a lot about the escalating conflict in the Middle East,” said James St. Aubin, chief investment officer at Ocean Park Asset Management in Santa Monica, California.
“There’s probably some trepidation or maybe some hesitation about putting money to work ahead of tomorrow’s jobs report.”
Gold prices rebounded from early losses as the U.S. dollar strengthened against major currencies. Spot gold rose 0.09% on the day to $2,658.87, hovering near record highs.
In currencies, the U.S. dollar index gained 0.26% to 101.91. The euro was slightly down at $1.1029, and not far from Wednesday’s low of $1.10325, a level last seen on Sept. 12.
Sterling weakened 1.1% to $1.3123 after Bank of England Governor Andrew Bailey told the Guardian newspaper that the central bank could become a “bit more aggressive” on rate cuts if inflation continued to ease. Against the Japanese yen, the dollar strengthened 0.1% to 146.61.
Treasury yields rose after the jobless claims data and service sector report. Two-year Treasury yields were last up at 3.6951% on Thursday, while benchmark 10-year yields were at 3.831%.
Markets imply a 35% chance the Fed will cut interest rates by another 50 basis points in November, compared with almost 60% last week, and have around 70 basis points of easing priced in by year-end.
(Reporting by Iain Withers in London and Chibuike Oguh in New YorkEditing by Peter Graff and Matthew Lewis)
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