US stocks dropped on Thursday after an unexpected rise in weekly jobless claims underscored the weak economy, while the euro gained on a successful Spanish debt auction.
Prices of US Treasuries rose as the number of Americans making new claims for jobless benefits rose by 19 000 to 479 000 in the week ended July 31 -- the highest level in nearly four months. It was also above forecasts of 455 000 versus 460 000 in the prior week.
Concern over persistently high unemployment and the fragile state of the global economy is running high ahead of Friday's nonfarm payrolls data.
The jobless claims report is "a big disappointment, and that doesn't bode well for tomorrow," said Dan Cook, senior market analyst at IG Markets in Chicago.
In morning New York trading, benchmark indexes were down.
The Dow Jones industrial average dipped 47.30 points, or 0.44 percent, to 10 633.13. The Standard & Poor's 500 Index dropped 6.15 points, or 0.55 percent, to 1 121.09. The Nasdaq Composite Index shed dropped 16.91 points, or 0.73 percent, to 2 286.66.
Global equities measured by the MSCI All-Country World Index turned flat on the US data, off 0.1 percent, while the Thomson Reuters global stock index dipped 0.04 percent.
For their part, European shares dropped in afternoon trade, moving in sympathy with Wall Street. The pan-European FTSEurofirst 300 index of top shares was down 0.2 percent at 1 068.48 points, slipping from three-month highs hit earlier in the session.
Japan's Nikkei closed up 1.7 percent, helped by top carmaker Toyota Motor Corp, which reported its best operating profit in two years.
EURO GETS SUMMER LOVE
The euro rose on Thursday, boosted by solid German industrial data and signs that Spain and Greece were making progress in trimming budget deficits.
The euro rose to $1.3217, up about half a percent on the day, while the dollar was off 0.5 percent at 85.85 yen.
The currency also got a lift after European Central Bank President Jean-Claude Trichet said incoming economic data for the third quarter showed stronger-than-expected euro zone growth. The ECB held interest rates at 1 percent as expected.
Trichet "sounded quite positive and constructive," said Sacha Tihanyi, strategist at Scotia Capital in Toronto, and that has added to a prevailing market tendency to buy euros.
A senior International Monetary Fund official told Reuters that Greece would receive a second tranche of international aid after an impressive start on its austerity plan, and that it must now shift to drastic reforms to return to growth.
Also Thursday, Spain sold 3.5 billion euros in three-year bonds at a lower yield than a previous auction in June, suggesting solid demand as it copes with fiscal problems.
Conversely, the dollar was down against a basket of major trading-partner currencies, with the US Dollar Index off 0.04 percent at 80.863 from a previous session close of 80.892.
US Treasury debt prices were higher. The benchmark 10-year US Treasury note added 8/32, with the yield at 2.93 percent. The 2-year US Treasury note was up 1/32, with the yield at 0.55 percent. At the longer end of the curve, the 30-year US Treasury bond gained 16/32, with the yield at 4.06 percent.
In energy and commodities prices, US light sweet crude oil futures fell 51 cents, or 0.6 percent, to $81.96 per barrel, and spot gold prices dropped $2.80, or 0.23 percent, to $1192.40. The Reuters/Jefferies CRB Index was down 0.05 points, or 0.02 percent, at 278.93. - Reuters
