Stocks, commodities drop on payrolls data; Spain yield tops 7%

July 6 (Bloomberg) -- Stocks and commodities fell, while Treasuries rose for a second day, after slower-than-forecast growth in U.S. payrolls fueled concern the economic recovery is slowing. Spain’s 10-year bond yields reached 7 percent.

The Standard & Poor’s 500 Index slipped 0.7 percent at 9:31 a.m. in New York and the Stoxx Europe 600 Index lost 0.8 percent. Treasury 10-year yields fell four basis point to 1.55 percent. Spain’s 10-year yield climbed as much as 26 basis points to 7.04 percent, while the yield on German two-year notes slid below zero. Three-month Euribor, or the rate European banks say they see each other lending in euros, fell to an all-time low. Oil lost 2.8 percent and corn declined 2 percent.

Global equities extended losses this morning after U.S. Labor Department data showed payrolls increased 80,000 last month, less than a 100,000 gain forecast in a Bloomberg survey. The European Central Bank yesterday reduced its benchmark rate to a record low of 0.75 percent and the People’s Bank of China cut borrowing costs for a second time in a month.

“There is weakness around the world,” Stephen Roach, a professor at Yale University and former non-executive chairman for Morgan Stanley in Asia, said in an interview on Bloomberg Television. “When you are at extremely low levels of policy interest rates, you can’t expect that that’s going to jump-start the economy.”

Jobs Report

Today’s labor report showed the unemployment rate held at 8.2 percent. Private employment, which excludes government agencies, increased 84,000 in June, the weakest in 10 months.

The government’s previous employment report on June 1 showed 69,000 jobs were created in May, the weakest growth in a year, and sent the S&P 500 down 2.5 percent for its biggest drop of 2012. Ten-year Treasury yields reached a record low of 1.4387 percent that day. The S&P 500 has rallied 7 percent since then and 10-year rates have increased.

The rebound in equities came after a 9.9 percent tumble from a four-year high in April dragged the S&P 500 to 12.9 times reported earnings, the cheapest level since November. Alcoa Inc. is scheduled to unofficially start the second-quarter earnings season when it releases results on July 9.

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