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Disappointing Jobs Report Fuels Rally in Treasuries, Gold

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Jan. 10 (Bloomberg) — Treasuries rallied with gold and the dollar retreated after U.S. payrolls rose less than forecast in December, easing concern stimulus cuts would accelerate. The Standard & Poor’s 500 Index fell, extending a yearly loss.

The 10-year Treasury yield fell nine basis points to 2.88 percent at 11:38 a.m. in New York. The S&P 500 dropped 0.3 percent. The Bloomberg Dollar Spot Index, which tracks the U.S. currency against 10 of its major peers, reversed a gain to fall 0.4 percent. Gold futures rose 1.2 percent to $1,243.56 an ounce. Oil climbed from an eight-month low and copper rallied after China’s imports grew. The Stoxx Europe 600 Index added 0.5 percent.

U.S. employers hired 74,000 workers in December, the slowest advance since January 2011, indicating a pause in the recent strength of the U.S. labor market that may partly reflect the effects of bad weather. The unemployment rate fell to 6.7 percent, as more people left the labor force. China’s imports rose the most in five months in December, and industrial production in France and Spain beat estimates, other data showed today.

“The markets have been priced for everything to go perfect,” Ron Florance, the Scottsdale, Arizona-based deputy chief investment officer for Wells Fargo Private Bank, which oversees $170 billion, said by phone. “This number shows us that it’s not going to be perfect. We’re still on the trajectory of recovery, but I would expect heightened volatility.”

Cutting Purchases

The Federal Reserve said last month it will cut monthly asset purchases to $75 billion from $85 billion. Policy makers will trim stimulus in $10 billion increments over the next seven meetings before ending them in December, according to a Bloomberg survey of economists on Dec. 19.

At the central bank’s December meeting, some members of the Federal Open Market Committee “expressed the view that the criterion of substantial improvement in the outlook for the labor market was likely to be met in the coming year if the economy evolved as expected,” meeting minutes showed Jan. 8.

The benchmark gauge of U.S. equities has gained 0.1 percent this week, trimming its decline for the year to 0.9 percent.

Alcoa Inc., the largest U.S. aluminum producer, slid 5.2 percent. The company reported fourth-quarter profit that missed analysts’ estimates after the close of normal trading yesterday. An S&P gauge of homebuilders rallied 2.6 percent as interest rates fell. Abercrombie & Fitch Co. surged 8.9 percent after increasing its full-year earnings prediction.

European Stocks

The Stoxx 600 climbed to the highest since May 2008 after retreating 0.4 percent yesterday.

Swatch Group AG added 3.6 percent after disclosing a positive outlook for 2014. Deutsche Lufthansa AG jumped 8.9 percent for the biggest increase in the Stoxx 600 after Europe’s second-largest airline said fuel and unit costs will decline this year as the carrier uses bigger, more modern planes. Metro AG gained 3 percent after a report said its biggest shareholder, Franz Haniel & Cie, may push for replacing its chief executive officer and selling some units. Haniel spokesman said the report was “nonsense.”

The MSCI Emerging Markets Index added 0.8 percent, trimming this week’s decline to 0.9 percent. A gauge of mainland shares in Hong Kong rose 0.1 percent, while the Shanghai Composite Index decreased 0.7 percent.

China Data

China’s trade data showed inbound shipments increased 8.3 percent from a year earlier. That compares with the median estimate for 5 percent growth in a Bloomberg News survey. China’s exports rose 4.3 percent with the trade surplus at $25.6 billion, narrower than projected.

India’s S&P BSE Sensex added 0.2 percent. Infosys Ltd., the nation’s second-largest software exporter, jumped 2.9 percent after raising its sales forecast. The rupee strengthened 0.2 percent, erasing this week’s decline.

Thailand’s SET Index dropped 0.2 percent. Anti-government protesters plan to surround government offices and occupy major intersections in Bangkok starting Jan. 13 to obstruct Feb. 2 elections and force caretaker Prime Minister Yingluck Shinawatra to step down.

The dollar weakened against all but one of its 16 major counterparts. The greenback fell 0.7 percent to 104.10 yen after climbing to 105.44 on Jan. 2, the strongest since October 2008. The U.S. currency lost 0.5 percent to $1.3665 per euro.

German Yields

Sweden’s krona rallied after that nation’s industrial production exceeded economist estimates. The currency strengthened 0.5 percent to 8.8804 per euro and climbed 0.9 percent to 6.4963 per dollar.

German 10-year bunds rose for the first time in three days, pushing the yield seven basis points lower to 1.85 percent. The rate on Portuguese securities of similar maturity was 0.3 percent lower at 5.33 percent before Moody’s Investors Service provides an update on the nation’s credit rating today.

The S&P GSCI Index added 0.4 percent after slipping yesterday to the lowest level since April, led by losses in crude and crops on the outlook for increased U.S. supplies. The measure still is headed for a second weekly decline.

West Texas Intermediate oil futures climbed 0.6 percent to to $92.21 a barrel. The price rose as much as 1.9 percent, paring a second weekly loss after falling to the lowest since May yesterday. Copper for March delivery in New York rose 1.2 percent to $3.3375 a pound.

Nickel surged the most in more than two months in London after a report that Indonesia, the world’s biggest producer of the metal from mines, detained Chinese ships as a ban on ore exports nears.


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