* Dollar mixed as data spurs uncertainty over Fed
* Oil slips as traders await rig count report
* Long-dated U.S. bonds rally, short-dated notes slip
(Add U.S. market open, byline, dateline; previous LONDON)
By Herbert Lash
NEW YORK, Sept 4 (Reuters) - Global equity markets tumbled
and the dollar traded mixed on Friday after a U.S. jobs report
for August kindled uncertainty over whether the Federal Reserve
will raise interest rates in two weeks.
The headline number of a less-than-expected increase of
173,000 in non-farm payrolls was offset by the generally strong
Labor Department report. The unemployment rate dropped to a near
7-1/2-year low and wages accelerated. ID:nL1N11925M
Also, the jobs count may have been flawed because of a
statistical fluke that has often led to sharp upward revisions
to payroll figures for August after initial weak readings.
Whether the Fed boosts rates in September or holds off for
later, investors are preparing for an eventual raise, said
Andrew Wilkinson, chief market strategist at Interactive Brokers
LLC in Greenwich, Connecticut. A hike would be the U.S. central
bank's first in almost a decade.
"Regardless of the global dislocation for equities,
investors still seem to be preparing for a lift-off in the fed
funds rate. There's not a lot to stop the onset of tightening at
some point in the near future," Wilkinson said.
The equity sell-off suggests there is deleveraging as
investors are forced out of positions they can no longer afford,
while high volatility still "hasn't been swept under the
carpet," Wilkinson said. "When the volatility indexes are
running at those levels, be on the watch," he said.
The CBOE Volatility Index .VIX , Wall Street's so-called
fear gauge, was up 6.9 percent at 27.17, or about double the
rate it traded at all year until mid-August.
Major U.S. and European stock indices were poised to end the
week lower. On Friday, the pan-European FTSEurofirst 300 index
.FTEU3 was down 2.17 percent at 1,397.80 points. MSCI's
all-country world stock index .MIWD00000PUS was down 1.34
percent.
On Wall Street, the Dow Jones industrial average .DJI fell
202.03 points, or 1.23 percent, to 16,172.73. The S&P 500 .SPX
slid 19.96 points, or 1.02 percent, to 1,931.17 and the Nasdaq
Composite .IXIC lost 25.18 points, or 0.53 percent, to
4,708.32.
U.S. medium- and long-dated Treasuries prices rose, while
short-dated prices were slightly lower,
The benchmark 10-year Treasury US10YT=RR rose 7/32 in
price to yield 2.1438 percent, while the U.S. two-year note
US2YT=RR fell 1/32 in price to yield 0.7246 percent.
Strong average hourly earnings and a drop in the
unemployment rate to 5.1 percent in the jobs report support the
view that the Fed will hike rates at its policy-setting meeting
on Sept. 16-17.
"They will probably raise rates just because they've been
wanting to get off the zero bound, but I do think it's one of
the closer calls," said Marc Bushallow, director of fixed income
at Manning & Napier in Rochester, New York.
The dollar index .DXY of major currencies traded rose 0.09
percent, while the dollar was down as much as 1 percent against
the yen JPY= , and was last trading at 119.26 yen, or a loss of
0.67 percent.
Against the euro EUR= , the dollar was up 0.04 percent at
$1.1116.
Crude futures fell as the oil market awaited a weekly
reading on the U.S. oil rig count, after the U.S. jobs report
failed to provide much direction.
Brent crude LCOc1 , the global benchmark for oil, was down
59 cents at $50.09 a barrel. U.S. crude's front-month CLc1
slid 57 cents to $46.18.