Major stock indexes, euro drop after US jobs data

NEW YORK: US and European stocks dropped on Thursday after an unexpected rise in weekly US jobless claims underscored the weakening economy, and the euro slipped a day ahead of the US government's monthly payrolls report. 

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. 

The news, coming a day ahead of the US government's closely watched monthly payrolls report, put investors on edge, as stubbornly high unemployment has fueled concerns on sustainable global growth. 

Treasuries prices rose on a safety bid as investors braced for the employment report, and oil and commodity prices slipped on slowing demand. Copper prices were also hit by worries about the outlook for the real estate market in China, the world's largest consumer of the industrial metal. 

China's banking regulator ordered lenders to test the impact of a fall in house prices of up to 50 per cent in key cities where prices have risen sharply, banking and regulatory sources said on Thursday. 

But the US labor market stole the spotlight on Thursday following the surprisingly weak jobless claims report. 

"Claims have been maddeningly stubborn to come down, and that could make for a rough tomorrow," said Bruce Zaro, chief technical strategist at Boston's Delta Global Advisors. 

Economists polled by Reuters expect Friday's US Labor Department report to show a drop of 65,000 in non-farm payrolls in July, hurt by the unwinding of the government's hiring for the census. Private employers are expected to have added 90,000 jobs. 

The Dow Jones industrial average was down 35.76 points, or 0.33 per cent, at 10,644.67. The benchmark Standard & Poor's 500 Index was down 4.49 points, or 0.40 per cent, at 1,122.75. The Nasdaq Composite Index was down 12.71 points, or 0.55 per cent, at 2,290.86. 

US stocks were also hurt by July retail sales that were mostly weaker than expected.The data was a sign that skittishness about high unemployment and economic conditions were causing consumers to cut back. 

Shares of department store operator JC Penney Co Inc fell 6.5 per cent to $22.41 while youth-oriented apparel chain Aeropostale Inc slumped 5.1 per cent to $26.04.