By Stephen Kirkland Aug. 6 (Bloomberg) -- U.S. index futures and European stocks declined after lower-than-estimated growth in American company payrolls added to evidence the economic recovery is slowing. Treasuries rallied and oil fell. Futures on the Standard & Poor’s 500 Index lost 0.8 percent at 8:45 a.m. in New York. The Stoxx Europe 600 Index decreased 0.5 percent, reversing earlier gains. Two-year Treasury yields fell to as low as 0.4977 percent, below 0.5 percent for the first time ever. The Dollar Index slipped 0.2 percent, extending its ninth weekly drop. Private payrolls that exclude government agencies rose by 71,000, less than forecast, after a gain of 31,000 in June that was smaller than previously reported. U.S. non-farm payrolls fell overall by 131,000 in July, the Labor Department said. That’s more than the 65,000 estimated in a Bloomberg survey of more than 80 economists. The world’s largest economy has been slow in recouping the 8.4 million jobs lost since the recession began in December 2007, keeping consumer spending from accelerating. “The jobs data is the key variable right now to the improving economy and an important indicator to the market -- it’s mildly disappointing,” said Eric Teal, chief investment officer at First Citizens Bancshares Inc. in Raleigh, North Carolina, which manages $4.5 billion. “We’re just in a soft patch now. I just don’t expect to see strong improvement there until we get some of the larger macro issues behind us.” The yield on the 10-year note decreased three basis points to 2.88 percent, according to BGCantor Market Data. The price of the 3.5 percent security maturing in May 2020 climbed 7/32, or $2.19 per $1,000 face amount, to 105 1/4. Dollar Drops The Dollar Index, which tracks the U.S. currency against those of six trading partners, has dropped 1.3 percent this week, heading for its longest run of weekly declines since 2004. The yen strengthened against all of its 16 most-traded counterparts. Crude oil fell for a third day, losing 1.1 percent to $81.12 a barrel. Copper dropped 0.5 percent, reversing earlier gains of as much as 0.8 percent. All but one of the 19 industry groups in the Stoxx 600 declined. HSBC Holdings Plc lost 1.1 percent, and Nestle SA dropped 1.5 percent. To contact the reporter on this story: Stephen Kirkland in London at skirkland@bloomberg.net

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