GLOBAL MARKETS-Investors run for safe havens after US data

NEW YORK (Reuters) - Investors fled U.S. stock
markets Wednesday and poured into Treasuries after dismal
U.S. economic data, driving benchmark yields to below 3.0
percent for the first time since December.
    The dollar initially fell to a four-week low versus the
euro as the employment and manufacturing reports for May
suggested U.S. growth was slowing more quickly than first
thought. The greenback rebounded on profit-taking in the euro,
joining currency safe-havens such as the yen and Swiss franc.
    Oil prices fell as much as 2 percent, while
gold, often a safe haven, rose nearly 1.0 percent.
    ``The sugar high that has buoyed the U.S. economy over the
past six months is wearing out, and there is little in economic
growth or foundation to show for it,'' said Douglas Borthwick, a
managing director with Faros Trading in Stamford, Connecticut.
    Yields on benchmark 10-year U.S. Treasury debt, the
favorite asset of investors looking for a safe place to store
cash in tough times, hit December lows, hovering at around 2.96
    Growth in the U.S. manufacturing sector slowed sharply in
May, with the Institute for Supply Management's index of
national factory activity falling to 53.5 in May, its lowest
level since September 2009.
    That followed a report from payrolls processor ADP Employer
Services that showed poorer job growth in the private sector
than expected, leading many Wall Street banks to slash
forecasts for Friday's non-farm payrolls figure from the
    ADP's report showed employers added a scant 38,000 jobs,
nearly four times below that expected by the market.
    The U.S. Labor Department will release its payroll numbers
for May on Friday. A Reuters poll on Wednesday put payrolls at
150,000 versus an earlier forecast of 180,000.

    Some analysts, like David Lutz at Stifel Nicolaus Capital
Markets in Baltimore, said some traders were talking about a
''whisper number'' of about 100,000 new jobs in May,
    ``If we have a payrolls number with revisions that is
anything like the ADP on Friday, then we are going to struggle
over the next couple of months,'' said Jim Paulsen, chief
investment officer at Wells Capital Management.
    Peter Kenny, managing director at Knight Capital in Jersey
City, New Jersey, concurred: ``It's not just about jobs. It's
about manufacturing, it's about real estate, it's about
consumer confidence. This is one data point in a very broad
picture, and it's not encouraging.''
    The Dow Jones industrial average was down 231.29
points, or 1.84 percent, at 12,338.50. The Standard & Poor's
500 Index was down 25.10 points, or 1.87 percent, at
1,320.10. The Nasdaq Composite Index was down 51.17
points, or 1.80 percent, at 2,784.13.
    The euro surged to a four-week high of $1.4458 against the
dollar before falling on profit-taking.
    While optimism of a second bailout for debt-plagued Greece
has helped the euro recover from May's sharp lows, some
investors remain worried about the global picture, including
the scheduled end this month of a $600 billion U.S. stimulus,
known as QE2.
    ``The euro remains in a kind of no-man's land -- it doesn't
want to break much higher but is finding buyers below $1.44,''
said Greg Salvaggio, vice president of trading at Tempus
Consulting in Washington.   
    Surveys showing factory growth eased in Europe and Asia
also sounded a note of caution for investors.
    Two surveys showed Chinese factories expanded in May for
the 27th straight month, although at a slower pace, suggesting
government efforts to curb credit are helping to cool the
    In Europe, fresh signs of decline among factories on the
euro zone's debt-laden periphery tugged sharply on
manufacturing growth across the region as a whole in May.