(Adds closing market prices)

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Strong demand for labor numbs Fed's rate cut outlook

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Benchmark Treasury yield hits four-month high at 4.405%

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Bitcoin drops as risk assets lose shine, gold peaks again

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Crude prices rise on growing supply concerns

By Herbert Lash and Caroline Valetkevitch

NEW YORK, April 2 (Reuters) - The three major U.S. stock

indexes fell about 1% on Tuesday and the yield on benchmark

10-year Treasuries hit a four-month high after data showing

strong labor demand raised the prospect that the Federal Reserve

could delay cutting interest rates.

The dollar also hit a four-month high against major trading

currencies but later retreated, as fears of intervention by

Japanese officials slowed the dollar's gains against the yen.

Bitcoin also fell, down 7.5% at one point, as risk

assets took a beating on concerns that rate cuts may not come as

soon as expected. The dollar index, a measure of the U.S.

currency against six peers, fell 0.21%. Gold scaled a new peak.

U.S. job openings, a measure of labor demand, edged up

8,000 to 8.756 million on the last day of February, the Labor

Department's Bureau of Labor Statistics said. Data for January

in the Job Openings and Labor Turnover Survey, or JOLTS, was

revised lower to show 8.748 million unfilled positions.

"We're back into a good news is bad news situation because

recently the economic data that's been released, including

today's JOLTS report, have been reflective of a fairly robust

economy," said Russell Price, chief economist at Ameriprise

Financial in Troy, Michigan.

"Combine that with we've seen inflation becoming sticky, it

pushes back the prospect of Federal Reserve interest rate cuts."

MSCI's gauge of stocks across the globe

closed down 0.49%, while on Wall Street, the Dow Jones

Industrial Average fell 1%, the S&P 500 lost 0.72%

and the Nasdaq Composite dropped 0.95%.

A 4.9% decline in Tesla shares also weighed on Wall

Street after quarterly deliveries fell for the first time in

nearly four years and missed Wall Street estimates.

Earlier in Europe, the pan-regional STOXX 600 index

closed down 0.80% at a one-week low after hitting an all-time

intraday high. Speculation about imminent interest rate cuts has

convinced investors to buy in to risky assets in recent weeks.

Treasury yields jumped on Monday after manufacturing data

grew for the first time since September 2022 and the personal

consumption expenditures index (PCE) last week was revised

higher for January as consumer spending boomed in February.

"When the ISM data bounced up above the 50 line, it wiped

out recession bets for a lot of people and also pulled forward

or unwound rate cut expectations," said Phillip Colmar, global

strategist at MRB Partners in New York.

"The economy hasn't been at all favorable towards rate cuts.

It signals what we have been suggesting, no rate cuts are

needed," Colmar said. "And then inflation is just not giving

that break for the Fed either."

Longer-duration Treasury yields rose to multi-month highs,

with the benchmark 10-year note's yield hitting

4.405%, its strongest since Nov. 28. It was last up 2.6 basis

points at 4.355%.

The two-year's yield, which reflects interest

rate expectations, fell 2.5 basis points to 4.693%.

Across the Atlantic, euro zone manufacturing activity

contracted at an even steeper pace in March than in February, as

demand continued to fall and German inflation eased. The 10-year

German bund fell 1.2 basis points to 2.398%.

Broader euro zone inflation data is due on Wednesday, and

will be closely watched for indications about when the European

Central Bank will cut rates.

The yen strengthened 0.03% versus the dollar at

151.57 after earlier dipping to 151.79. It has traded in a tight

range since reaching a 34-year trough of 151.975 on Wednesday,

which spurred Japan to step up warnings of intervention.

On Tuesday, Finance Minister Shunichi Suzuki reiterated that

he would not rule out any options to respond to disorderly

currency moves.

Brent crude briefly rose above $89 a barrel for the first

time since October, as oil supplies faced new threats from

Ukrainian attacks on Russian energy facilities. Ukraine struck

one of Russia's biggest refineries on Tuesday.

U.S. crude rose $1.44 to settle at $85.15 a barrel

and Brent settled up $1.50 at $88.92 a barrel.

Gold hit a new record high as traders snapped up the safe

haven asset amid growing Middle East tensions, largely ignoring

a still-strong dollar and tempered bets for U.S. rate cuts.

Spot gold hit an all-time high of $2,276.89 an ounce.

U.S. gold futures settled 1.1% higher at $2,281.8.