WASHINGTON/LONDON : European stocks pared losses and Wall Street reversed earlier gains on Thursday as investors weighed uncertainty over central bank tapering and economic recovery due to the coronavirus Delta variant alongside strong U.S. weekly jobless claims data.
Major U.S. indexes ended weaker but stayed close to all-time highs.
The Dow Jones Industrial Average fell 0.43per cent to end at 34,879.38 points. The S&P 500 lost 0.46per cent to 4,493.28. The Nasdaq Composite dropped 0.25per cent to 15,248.25.
Federal Reserve Bank Governor Michelle Bowman voice Wednesday joined the growing number of policymakers who say the weak August jobs report likely will not throw off the central bank's plan to trim its US$120 billion in monthly bond purchases later this year.
Earlier in the day, U.S. data showed Americans filing new claims for jobless benefits fell to the smallest number in nearly 18 months last week, offering more evidence that job growth was curbed by labor shortages rather than cooling demand for workers. The data stoked expectations the Fed may start early tapering of economic support.
After falling as much as 0.9per cent in morning trade, the pan-European STOXX 600 index ended largely unchanged around 467.57 points. The index had shed 1.5per cent over the past two days on fears of a more-hawkish-than-expected ECB.
"We're seeing some modest weakness mainly because the market is just in flux. There is no real clarity on when we will start to see the Fed and ECB start to pull back stimulus," said Edward Moya, a senior market analyst with OANDA in New York.
"Wall Street is still bullish. You're going to have a slow Fed as far as tapering and interest rate hikes. We will see a tremendous amount of accommodation to pump up this economy."
Euro zone bonds yields tumbled as the European Central Bank took its first tentative step in withdrawing COVID-era stimulus. Southern Europe led a fall in euro zone sovereign bond yields.
The euro rose 0.13per cent against the dollar, its first gain in four sessions, while French 10-year yields turned negative. [GVD/EUR]
Longer-dated U.S. Treasury yields fell after a strong auction for 30-year bonds closed out US$120 billion in coupon-bearing supply this week. [US/]
Instead of hinting at any potential end date for its pandemic-era purchase programme, ECB President Christine Lagarde channelled the spirit of former British Prime Minister Margaret Thatcher, saying: "The lady isn't tapering."
Germany's 10-year yield, the benchmark for the bloc, fell. [GVD/EUR]
MSCI's benchmark for global equity markets fell 0.42per cent. Emerging markets stocks fell 1.03per cent.
The UK's FTSE 100 dropped 1per cent with low-cost airline easyJet tumbling over 10per cent as it tapped shareholders for 1.2 billion pounds (US$1.7 billion). [nL8N2QB15H] [.EU]
MSCI's broadest index of Asia-Pacific shares ended down 1per cent, in its worst daily performance since Aug. 19 when markets worried about the Fed tapering its massive asset purchase programme.
Chinese tech giants Tencent Holdings Inc, NetEase Inc and Alibaba Group Holding Ltd had slumped 8.5per cent, 11per cent and 6per cent respectively after online gaming chiefs were summoned by authorities to check they were sticking to strict new rules for the sector.
"The global story is looking soft and it's being hit by the Delta variant plus concern about potentially the Fed still moving towards a taper," said Rob Carnell, Asia head of research at ING. "It's an unsettling combination of things."
Stocks in Hong Kong, where many heavyweight Chinese firms are also listed, shed 2.3per cent.
News that Chinese authorities had told gaming firms to stop focusing "only on money" and "only on traffic" had hurt companies with large gaming operations. Tencent fell 8.5per cent, Bilibili lost nearly 9per cent and NetEase slumped 11per cent.
Evergrande, the country's most indebted property giant, was hit with more turbulence.
Media reports the company would suspend some loan interest payments and payments to its wealth management products sent its shares down more than 10per cent at one point, although they recovered almost half of the drop on news that some creditors had agreed to loan payment extensions.
Korea's Kospi fell 1.5per cent, also under pressure from regulatory scrutiny of local tech players. Korean fintech names in the spotlight included Kakao Corp, which sank 7.2per cent, and Naver Corp, down 6.9per cent.
Australian stocks lost nearly 2per cent after payrolls data showed a sharp drop in jobs in the first half of August.
Bullion was buoyed by a slight retreat in the dollar. Spot gold prices rose 0.32per cent and futures settled up 0.4per cent, at US$1,800 per ounce. [GOL/]
Oil prices fell on China's plan to tap state reserves and a smaller-than-expected drawdown in U.S. crude supplies.
In volatile trade, Brent futures fell US$1.15, or 1.6per cent, to settle at US$71.45 a barrel. U.S. West Texas Intermediate (WTI) crude fell US$1.16, or 1.7per cent, to US$68.14. That was the lowest settlement for both since Aug. 26. [O/R]
(US$1 = 0.7246 pounds)
(Additional reporting by Alun John in Hong Kong; Editing by Carmel Crimmins, Nick Zieminski and Richard Chang)