US Markets

U.S. stocks closed lower Friday for just the second time in two weeks as a disappointing monthly employment report prompted investors to dial back their recent optimism about the economic recovery. The Dow Jones Industrial Average finished down 62.29 points, or 0.49%, to 12657.20, its biggest loss since June 24. The blue-chip index pared losses during the final hour of trading; it was down as much as 152 points earlier in the session.

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For the week, the Dow edged up 0.6%, its third gain out of the last four weeks. It is up 9.3% year to date. The Standard & Poor's 500-stock index shed 9.42 points, or 0.7%, to 1343.80, as financials, industrials and energy stocks struggled. All 10 of the S&P 500 sectors closed in negative territory. The index managed a 0.3% gain for the week. The technology-heavy Nasdaq Composite fell 12.85 points, or 0.45%, to 2859.81, its first drop in nine sessions.

Stocks were in negative territory from the opening bell after the Labor Department reported that U.S. nonfarm payrolls rose 18,000 last month, a fraction of what was expected. Small gains in the private sector were just enough to outweigh continued government job losses. The jobless rate, which is obtained from a separate household survey, increased for a third straight month to 9.2% in June, the highest since December 2010. In May, the unemployment rate was 9.1%.

The tone was further damped by comments from President Barack Obama following the jobs report. He acknowledged that the employment data confirm policy makers have a big hole to fill on stimulating labor growth. Dow component Alcoa kicks off second quarter earnings season after the market close Monday.

Shares of staffing companies slumped after the weak jobs report, adding to concerns that the U.S. labor market will take years to recover to full employment. Monster Worldwide fell 48 cents, or 3.2%, to 14.65 and ManpowerGroup dropped 2.49, or 4.3% to 56.13. On Assignment declined 37 cents, or 3.4%, to 10.42 and Robert Half International fell 1.12, or 4%, to 26.68.

European Market

European stocks fell sharply Friday after disappointingly weak U.S. jobs data shocked investors, with financial shares under pressure, especially in the peripheral markets ahead of European bank stress tests next week. The Stoxx Europe 600 index slumped 0.8% to close at 273.76. For the week, the index slipped 0.4%. The U.S. Labor Department said nonfarm payrolls rose 18,000 in June, while the unemployment rate rose to 9.2% in June from 9.1%, the highest level since December.

Wall Street opened lower on the jobs news, which added to an already volatile day for Europe, especially for banking stocks ahead of the release of results from the second round of bank stress tests July 15. Among the major indexes, the German DAX 30 fell 0.9% to close at 7,402.73, with shares of Commerzbank AG down 2.1% and Deutsche Bank AG down 2.2%. Shares of utility RWE AG fell 4% after a report in Financial Times Deutschland that the company may discuss a share sale at an August meeting. A company spokesman declined to comment. In Paris, the CAC 40 index finished 1.7% lower at 3,913.55, pressured by big banks. Shares of BNP Paribas SA and Societe Generale SA both fell 3.9%, while Credit Agricole SA was down 4%.

Peripheral banking stocks saw some of the biggest losses Friday. Shares of UniCredit SpA fell nearly 8%. Its shares were briefly suspended in Italy, but then resumed trading. The FTSE MIB index fell 3.5% to 19,049.8. Worries about the future of Italy's Finance Minister Giulio Tremonti also weighed on Italian stocks. Other peripheral markets also fell, with Spain's IBEX 35 index down 2.5% at 9,938.20, led by 4.9% fall for BBVA SA and a 3.8% drop for Banco Santander SA. In London, the FTSE 100 index fell 1.1% to settle at 5,990.58, with Royal Bank of Scotland Group PLC down 2.6% and Lloyds Banking Group PLC down 3.5%.

Asian Markets

Japanese, Honk Kong and Australian stocks ended higher Friday as U.S. employment data released overnight improved risk appetite and the outlook for the closely watched nonfarm payrolls due later in the day. Japan's Nikkei Stock Average ended the day 0.7% higher at 10,137.73, while Hong Kong's Hang Seng Index added 0.9% to 22,726.43. China's Shanghai Composite Index rose 0.1% to 2,797.77. Taiwan's Taiex slipped 0.3% to 8,749.55, while South Korea's Kospi ended little changed at 2,180.35. The broad advance came after Thursday's data showed an increase in U.S. private sector employment that outstripped economists' forecasts. The Nikkei ended the week with a 2.7% rise, while the Australian benchmark recorded a weekly gain of 1.4%.

Markets in Hong Kong, Shanghai and Seoul also rose for a third successive week. Stock gains on mainland China were muted ahead of the release of much-awaited June inflation figures Saturday. Chinese banks and property developers supported the advance in Hong Kong as well as Shanghai. Industrial & Commercial Bank of China Ltd. rose 1.4% in Hong Kong and 0.7% in Shanghai, while Bank of Communications jumped 2.7% in Hong Kong and was up 0.5% in Shanghai.

In the property sector, China Overseas Land & Investment Ltd. advanced 1.9% and China Resources Land Ltd. jumped 3.4% in Hong Kong, China Vanke Co. gained 0.6% in Shenzhen, while Poly Real Estate Group Co. rose 1% in Shanghai. Japanese equities got a boost from a rising dollar, which supported exporters. Auto makers were among the big beneficiaries, with Suzuki Motor Corp. up 1.8%, Toyota Motor Corp. up 1.3% and Mitsubishi Motors Corp. up 2.9%.

Base Metals

Base metals closed lower on the London Metal Exchange Friday after a disappointing U.S. jobs report encouraged traders to shed risk assets in favor of safe haven investments, such as the Swiss franc and gold. Copper and its peers slumped as the U.S. Labor Department announced nonfarm payrolls rose 18,000 in June, well below expectations. The unemployment rate rose to 9.2% in June from 9.1% the prior month, the highest level since December.

Copper and other industrial metals are sensitive to economic data as they are widely used by industry in manufacturing and construction. Negative economic numbers often raise fears of lower demand for industrial commodities. LME three-month copper closed the day at $9,661 a metric ton, down 0.8% on Thursday's PM kerb close.

Three-month aluminum was 2.1% lower at $2,535/ton. Oil futures sold off sharply Friday after the government said the U.S. economy barely added jobs last month, surprising markets and stoking worries that energy demand is weakening.

Light, sweet crude oil for August delivery settled down $2.47, or 2.5%, to $96.20 a barrel on the New York Mercantile Exchange. Brent crude oil on ICE Futures Europe, the European benchmark, settled down 26 cents, 0.2%, to $118.33 a barrel. Gold futures ended at a two-week high Friday after the monthly U.S. employment data surprised traders with a weaker than expected reading.

The most actively traded contract, for August delivery, gained $11, or 0.7%, to settle at $1,541.60 a troy ounce on the Comex division of the New York Mercantile Exchange. Thinly traded July-delivery gold settled up $11, or 0.7%, at $1,541.20 a troy ounce.

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