Picture: THINKSTOCK
Picture: THINKSTOCK

NEW YORK — Major stock markets and the US dollar fell on Wednesday after weaker-than-expected growth in US private sector jobs and services dented some optimism about the world’s largest economy, while investors awaited policy meetings by central banks in the eurozone and Japan.

Brent crude slipped below $110 a barrel as oil stockpiles swelled in the United States — the world’s top oil consumer — where a struggling economy is limiting demand for fuel.

US private employers added 158,000 jobs in March, the smallest gain in five months and falling short of economists’ expectations. The report by ADP injected caution among investors about Friday’s all-important government jobs data.

"The disappointing headline did dent some of the recent optimism surrounding the US recovery and the overall improvement in labour markets," said Omer Esiner, chief market analyst at Commonwealth Foreign Exchange in Washington.

"While the ADP and broader non-farm payroll numbers have not had the closest correlation over recent months, investors are likely to go into Friday’s jobs report a bit more cautious."

Analysts forecast US non-farm payrolls hit 200,000 in March, with the unemployment rate seen holding steady at 7.7%.

A separate release showed the pace of growth in the vast US services sector slowed in March to the lowest level in seven months as new orders and employment measures pulled back.

The MSCI world index slipped 0.2% to 359.42 points.

The Dow Jones industrial average dropped 26.45 points, or 0.18%, to 14,635.56. The Standard & Poor’s 500 Index fell 6.01 points, or 0.38%, to 1,564.24. The Nasdaq Composite Index shed 8.72 points, or 0.27%, to 3,246.15.

European shares lost 0.5% after surging 1.3% the previous day, with heavy falls in the telecoms and mining sectors.

The dollar index, which measures the greenback versus a basket of currencies, dropped 0.3% to 82.697.

The euro rose 0.3% to $1.2856, while the dollar fell 0.5% to ¥92,92.

The European Central Bank (ECB) and the Bank of Japan (BoJ) are both expected to make monetary policy announcements on Thursday.

Analysts said a recent run of weak eurozone data, political turmoil in Italy, and concerns over Cyprus could lead ECB President Mario Draghi to strike a dovish tone in his comments after the meeting.

The BoJ is widely expected to ramp up its bond buying and extend the maturities of the bonds it purchases, although some traders have pared back bets against the yen lately given the already hefty short positions.

Expectations of further easing drove Japan’s Nikkei average up 3% for its biggest one-day rise in almost two months.

The benchmark 10-year US Treasury note was up 9/32, with the yield at 1.8296%.

Brent shed 97 US cents to trade at $109.72 a barrel, while US crude slid 75 US cents to $96.44.

Further pressure came from concern a prolonged oil pipeline outage in the US Midwest would cause inventories to build up near the delivery point of the benchmark contract in Cushing, Oklahoma.

Reuters