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Oil price gain on Middle East fears capped by inventory

build

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Dollar hits three-week high after strong U.S. employment

report

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U.S. bond yields up as investors monitor data, Middle East

(Updates prices after U.S. stock market close)

By Sinéad Carew and Lawrence White

NEW YORK/ LONDON, Oct 2 (Reuters) - MSCI's global

equities index was down slightly on Wednesday while the dollar

rose and oil prices pared earlier gains, as investors digested

U.S. economic data and anxiously awaited Israel's response to

Iran's missile attack the previous day.

Oil prices rose on worries that further escalation in the

Middle East could threaten oil supplies from the world's top

producing region, but gains were limited by a large build in

U.S. crude inventories.

U.S. President Joe Biden said he would not support any

Israeli strike on Iran's nuclear sites and urged Israel to act

"proportionally" in response to Iran's biggest ever direct

attack on Israel. Iran, after firing ballistic missiles on

Israel on Tuesday, said early Wednesday that its attack was

finished barring further provocation.

The dollar hit a three-week high against the euro after the

ADP national employment report showed U.S. private payrolls

increased more than expected in September ahead of Friday's

highly anticipated jobs data.

Longer-dated U.S. Treasury yields rose after the data

pointed to a stable labor market while investors monitored

Middle East hostilities.

"The markets are still bracing for any other geopolitical

developments and settling a little after yesterday," said Matt

Miskin, co-chief investment strategist at John Hancock

Investment Management.

Looking at the private payrolls data, Miskin said "the bond

market is looking at the next Fed meeting and saying we're

probably not going to get a 50 basis point cut."

A strike by 45,000 dockworkers halting shipments at U.S.

East Coast and Gulf Coast ports entered its second day on

Wednesday with no negotiations currently scheduled between the

two sides, sources told Reuters.

On Wall Street, the Dow Jones Industrial Average rose

39.55 points, or 0.09%, to 42,196.52; the S&P 500 rose

0.79 point, or 0.01%, to 5,709.54; and the Nasdaq Composite

rose 14.76 points, or 0.08%, to 17,925.12.

MSCI's gauge of stocks across the globe fell

0.38 point, or 0.04%, to 845.49. Earlier the STOXX Europe 600

index closed up 0.05% at 521.14.

In energy markets, U.S. crude settled up 0.39% at

$70.10 a barrel and Brent ended the session at $73.90

per barrel, up 0.46% on the day.

In Treasuries, the yield on benchmark U.S. 10-year notes

rose 4 basis points to 3.783%, from 3.743% late on

Tuesday, while the 30-year bond yield rose 4.9 basis

points to 4.1299%.

The 2-year note yield, which typically moves in

step with interest rate expectations, rose 1.4 basis points to

3.6352%, from 3.621% late on Tuesday.

A closely watched part of the U.S. Treasury yield curve

measuring the gap between yields on two- and 10-year Treasury

notes, seen as an indicator of economic

expectations, was at a positive 14.6 basis points.

In currencies, the dollar index, which measures the

greenback against a basket of currencies including the yen and

the euro, rose 0.34% to 101.60.

The euro was down 0.16% at $1.1049 while the dollar

strengthened 2% against the Japanese yen to 146.43.

In precious metals, spot gold fell 0.14% to $2,659.22

an ounce. U.S. gold futures fell 1.02% to $2,640.00 an

ounce.