US markets slip despite job data

FINANCIAL markets reversed an early exuberant reaction to the news that the pace of job creation in America had slowed in August, with the foreign exchange and bond markets ending sharply lower, writes Diane Coyle.

Traders initially judged that the data would postpone another increase in interest rates, but markets more than reversed their early gains. The 30-year Treasury bond moved down just over half a point at 100 1 32 , and the dollar fell by more than two pfennigs to DM1.55 at midday.

Other markets followed, with the pound falling two pfennigs to DM2.41 and the gilts market closing more than a point lower.

The US unemployment rate stayed at 6.1 per cent in August. The number of jobs outside farming increased by 179,000 - well below both the expected 230,000 rise and July's increase of 251,000.

The dollar was undermined further by an increase in Japan's trade surplus, just a few days before more US-Japanese trade talks. It widened to dollars 14.5bn in July from dollars 13.8bn a year earlier. The figures reflected the yen's appreciation against the dollar over the 12 months, and the surplus fell in yen terms.