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Investors wary ahead of stock slip, US jobs data

Investors wary ahead of stock slip, US jobs data
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LONDON, Aug 5 (Reuters) – European equities slipped on Friday and were little changed on the week as traders awaited U.S. jobs data to provide clues about the health of the world’s largest economy.

The MSCI world equity index, which tracks shares in 47 countries, rose 0.1% and was set for a weekly gain of 0.6%, marking its third straight week of gains. (.MIWD00000PUS).

At 1117 GMT, the STOXX 600 was down 0.3% (.STOXX) And on track to lose 0.1% for the entire week. London’s FTSE 100 fell 0.2% (.FTSE). Wall Street futures were steady, . Read more

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Central banks around the world have raised interest rates in an attempt to limit rising inflation, but European stocks have rallied in recent weeks and are trading near two-month highs.

“Equity futures are comfortable with the idea that central banks are raising interest rates will be enough to keep inflation under control over the long term,” said Kiran Ganesh, multi-asset strategist at UBS.

Investors will look to US jobs data to see if the Federal Reserve’s aggressive pace of rate hikes is starting to slow economic growth.

The data is expected to show that non-farm payrolls increased by 250,000 jobs last month and rose by 372,000 in June. Read more

“So far, markets are responding to strong economic data as good news. But at some point, they may question whether the Fed’s tightening is having the desired effect if the economy remains strong,” ING economists wrote in a note to clients.

“At that point, they may be concerned that rates may rise further, or stay longer.”

UBS’s Ganesh said a non-farm payrolls figure in the 200,000 to 300,000 range would be consistent with a “soft landing” for the economy, while a higher figure would suggest the Fed needs to raise interest rates further to contain demand.

Data on Thursday showed that the number of Americans filing new claims for unemployment benefits rose last week, indicating that weakness in the labor market is already underway. Read more

Cleveland Fed President Loretta Meister struck a dovish tone on Thursday, saying the Fed should raise interest rates above 4% to bring inflation back to the target. Read more

The closely watched portion of the U.S. Treasury yield curve, which measures the gap between yields on two- and 10-year Treasury notes, dipped to 39.2 basis points on Thursday, the deepest dive since 2000.

An inverted yield curve is often seen as an indicator of a future recession.

Oil prices rose, recovering after the previous session saw prices hit their lowest level since February. Concerns about supply shortages were enough to override fears of weakening fuel demand. Read more

Global crude oil markets remain strongly bearish, with immediate prices higher than in future months, indicating tight supply.

The U.S. dollar index was up about 0.2% and the euro was down 0.1% at $1.0233. The Australian dollar, seen as a liquid proxy for risk appetite, was down 0.4% at $0.6942. Read more

The British pound was down 0.2% at $1,214.

The Bank of England raised interest rates by the most in 27 years on Thursday and warned that a longer recession is coming. Read more

European government bond yields edged higher, with the benchmark 10-year German government bond up 4 basis points at 0.836%.

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Reporting by Elizabeth Howcroft; Editing by Bradley Perrett and Jan Harvey

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Elizabeth Howcroft

Thomson Reuters

Reports on the intersection of finance and technology with cryptocurrencies, NFTs, virtual worlds and “Web3” driving finance.

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