US Markets

U.S. stocks kicked off September on a sour note, snapping a four-day winning streak as financials weakened and investors expressed repidation ahead of the government's monthly jobs report. The Dow Jones Industrial Average fell 119.96 points, or 1%, to 11493.57. The index swung from early losses to a triple-digit gain before falling again in another volatile session. The Standard & Poor's 500-stock index sank 14.47 points, or 1.2%, to 1204.42, led lower by financial and industrial stocks. The technology-heavy Nasdaq Composite shed 33.42 points, or 1.3%, to 2546.04.

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Goldman Sachs Group was one of the biggest declining financial stocks, sliding $4.06, or 3.5%, to 112.16. The Federal Reserve ordered Goldman to conduct an independent review of foreclosure practices by its former mortgage subsidiary, Litton Loan Servicing LP, which was sold earlier in the day to Ocwen Financial. Citigroup also fell 1.05, or 3.4%, to 30, Morgan Stanley dropped 57 cents, or 3.3%, to 16.93 and Dow component J.P. Morgan Chase declined 1.26, or 3.4%, to 36.30. The market's downdraft followed a reading on manufacturing activity that exceeded economists' expectations. The Institute for Supply Management purchasing managers' index came in at 50.6 for August. Though not a robust reading, it was much better than economists were expecting. Inventory gains were the driver, but the subindexes, such as new orders, production and employment, were weak.

Relief that the manufacturing index wasn't a disaster sent the Dow up as much as 103 points in morning trade. But worries about economic growth returned to the forefront and hindered the market's early advance. The White House downgraded its outlook for the economy, forecasting unemployment could average 9% in 2012. It also predicted slower than expected growth for the next several years.

Investors will now turn their focus to the government's jobs report, due Friday morning. A Labor Department report earlier Thursday showed the number of people claiming new jobless benefits dropped last week, although the still-elevated level reflects continued weakness in the labor market.

European Markets

European stock markets started September on a firm note following stronger-than-expected U.S. manufacturing data, though worries about a stalling global economy lingered after a weaker than expected manufacturing report from the euro zone. U.K. banks led the gains Thursday on hopes that major domestic reforms to the industry will be delayed, while French media conglomerate Lagardere saw shares fall on a profit warning. The Stoxx Europe 600 index rose 0.6% to 238.93, recovering from morning losses after data from the Institute for Supply Management showed manufacturing activity in the U.S. continued to grow in August.

The stream of high-profile data will continue Friday with the release of closely watched data on U.S. nonfarm payrolls for August. In Europe, the manufacturing purchasing managers index for the euro zone fell to 49.0 in August from 50.4 in July, dropping below the 50 threshold that separates growth from contraction. That was the first shrinkage in activity since September 2009 and marked a downward revision from the preliminary reading of 49.7.

Also weighing on the market was lackluster demand at a key auction of Spanish government debt, leaving the country's funding outlook for the rest of the year looking challenging despite the European Central Bank's presence in the secondary market that has kept a lid on yields. Among national stock-market indexes, the U.K.'s FTSE 100 index added 0.4% to 5418.65, and France's CAC-40 index rose 0.3% to 3265.83. Germany's DAX index shed 0.9% to 5730.63 as the economic fears weighed.

Royal Bank of Scotland Group soared 8.2% and Lloyds Banking Group climbed 6.2% on a report in the Financial Times that the U.K. government will give banks until after 2015 to comply with upcoming restructuring requirements. German steel producer ThyssenKrupp dropped 2.4% amid broad losses for the country's industrial and manufacturing stocks. But utility stocks also were weaker; RWE declined 2.7%. French midcap Lagardere slumped 11% after the conglomerate warned that profit for the year will fall short of expectations amid problems for its sports division.

Asian Markets

Asian equity markets ended mostly higher Thursday, with sentiment supported by signs of an improvement in Chinese and U.S. manufacturing data. Hong Kong's Hang Seng Index rose 0.3%, Japan's Nikkei Stock Average advanced 1.2%, and South Korea's Kospi was flat. Bucking the trend, China's Shanghai Composite declined 0.4%. Gainers Thursday included exporters, with shares of technology firm Samsung Electronics up 3.6% in South Korea.

Casio Computer climbed 3.9% and Kyocera Corp. rose 2.3% in Tokyo. The Japanese government announced it would invest $2.6 billion into a major new small flat screen joint venture linking Sony, Toshiba and Hitachi. Sony rose 2%, Toshiba climbed 0.9%, and Hitachi gained 1.0%. Tech-sector gains spread to Hong Kong trading, with Foxconn International Holdings rising 2.1%. Goldman Sachs upgraded the firm to Neutral from Sell. Alibaba.com rose 2.4%, and Tencent Holdings advanced 1.4%. Companies linked to the mainland Chinese economy came under some selling pressure though, with Agricultural Bank of China down 0.4% in Shanghai.

The input price components of the Chinese PMI data showed that inflation remained elevated in July. The Chinese government has been acting to curb inflation by tightening monetary policy, prompting worries of a hard-landing for the economy. Steel makers posted notable gains in Japan, with Kobe Steel up 2.8%, and JFE Holdings up 2.8%. The Nikkei reported that a stronger yen and lower prices for commodities are likely to reduce the burden of raw-material costs for Japan's four biggest steel firms in fiscal 2012 by around Y200 billion ($2.59 billion).

Commodities

Copper closed $130 lower on the London Metal Exchange Thursday as a stronger U.S. dollar weighed heavily on base metals. The markets failed to regain much ground despite better than expected U.S. manufacturing data as the greenback pushed higher against the euro. A stronger greenback tends to damp demand for the dollar-denominated commodities, as they appear more expensive to buyers using other currencies. LME three-month copper closed the afternoon open outcry session at $9,144 a metric ton, down 1.4% on Wednesday's close.

Crude oil futures settled modestly higher Thursday, inching to a one-month high, but failed to break above $90 a barrel as a rally in equities prices fizzled out. Light, sweet crude oil for October delivery settled 12 cents higher, at $88.93 a barrel, the highest level since Aug. 3. The contract hit a high of $89.90 a barrel, which many traders said placed it on a path to challenge $90.50, but the rally lost steam when equities turned lower. ICE October Brent crude settled 56 cents lower, at $114.29 a barrel. Gold futures fell slightly as better-than-expected U.S. manufacturing data limited demand for a refuge, but trading was thin as market participants look ahead to Friday's closely watched reading on the U.S. labor market. The most actively traded gold contract, for December delivery, fell $2.60, or 0.1%, to settle at $1,829.10 a troy ounce on the Comex division of the New York Mercantile Exchange.