LONDON (AP) — A mixed U.S. jobs report took the edge off global stock markets Friday as it raised questions over the pace of growth in the world's largest economy and when the U.S. Federal Reserve will start reducing its monetary stimulus.
The U.S. economy added a net 162,000 jobs in July, the fewest since March and below analyst expectations for an 183,000 increase. The previous two months' gains, meanwhile, were revised down.
The hiring was nevertheless strong enough to lower the unemployment rate to a 4 ½ -year low of 7.4 percent, from 7.6 percent. Forecasts were for a more modest dip to 7.5 percent.
The payrolls figures are often the most important piece of economic news that investors have to digest every month. That may be more so now as investors try and gauge when the Fed will start to reduce its monetary stimulus.
The Fed has already stated that a reduction in the current $85 billion worth of asset purchases it is making every month is on the cards. The Fed has been pumping money into the U.S. economy for over four years in an effort to keep interest rates down and help boost the economy.
Analysts are divided over whether the so-called tapering will occur in September or later.
"The report leaves the market hankering for further clues surrounding tapering," said Andrew Wilkinson, chief economic strategist at Miller Tabak & Co.
Europe lost its early gains to trade lower, with Germany's DAX down 0.2 percent at 8,392.85 and France's CAC 40 dropping 0.1 percent to 4,038.47. Britain's FTSE 100 fell 0.6 percent to 6,641.38 as Royal Bank of Scotland shares shed 4.5 percent on disappointing earnings.
U.S. stocks fell on the open. The Dow was down 0.3 percent at 15,576.07 while the broader S&P 500 declined the same rate to 1,701.90.
The dollar fell against most currencies, a sign that some investors are betting the Fed may keep its monetary stimulus program at the current level for a little longer than expected. The stimulus lowers market interest rates, reducing the appeal of some dollar-denominated investments, such as Treasurys. That in turn weakens appetite for the dollar.
The dollar fell to 99.11 Japanese yen from 99.49 yen late Thursday. The euro was up to $1.3269 from $1.3226.
Earlier in Asia, markets ended higher. Japan's Nikkei 225 index surged 3.3 percent to 14,466.16, with export shares boosted by a weakening yen. Hong Kong's Hang Seng added 0.5 percent while in mainland China, the Shanghai Composite Index rose less than 0.1 percent.
South Korea's Kospi was up 0.1 percent and Australia's S&P/ASX 200 climbed 1.1 percent.
Benchmark crude for August delivery was down $1.11 to $106.77 a barrel in electronic trading on the New York Mercantile Exchange.
Kelvin Chan in Hong Kong contributed to this report.