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US jobs reports show mixed picture ahead of Friday's

payrolls

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S&P 500, Nasdaq and Dow Jones all open in red

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European shares fall

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New US tariff report also in mix

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UK assets underperform - gilts, stocks, pound all fall

By Alun John

LONDON, Jan 8 (Reuters) - A global bond selloff

continued on Wednesday, hurting stocks and boosting the dollar,

on the back of evidence the U.S. economy is in good health,

likely limiting further rate cuts, and renewed reports about

U.S. tariffs.

The benchmark 10-year U.S. Treasury yield rose to as high as

4.73%, its highest since April 2024, building on Tuesday's 7

basis point (bp) rise.

The selloff in bonds on Wednesday accelerated after a CNN

report that U.S. President-elect Donald Trump is considering

declaring a national economic emergency to provide legal

justification for a series of universal tariffs on allies and

adversaries.

This feeds into investor uncertainty, which, say analysts,

is already causing a higher "term premia" - effectively the

additional yield investors demand to account for the uncertainty

of investing in longer-dated bonds.

The report, and higher yields, also hurt shares, with the

three main U.S. share benchmarks all opening slightly lower,

extending declines from Tuesday.

The S&P 500 dropped 0.12% in the first few minutes of

trading to 5,900 and the Nasdaq shed 0.1% to 19,460.

European stocks also dropped 0.5%, giving back an

earlier gain, after the CNN report.

STRONG ECONOMY

Also weighing on U.S. Treasuries in recent weeks has been

strong U.S. economic data, which has caused investors to scale

back their expectations for the size of Federal Reserve rate

cuts this year.

Markets are only fully pricing in one 25-bp rate cut in

2025, and see around a 60% chance of a second.

That picture was complicated somewhat on Wednesday by the

ADP National Employment Report showing private payrolls rose by

122,000 jobs last month, lower than the 140,000 economists

polled by Reuters were expecting.

However, a separate Labor Department report showed jobless

claims stood at 201,000 last week, lower than estimates of

218,000, and numbers on Tuesday showed U.S. job openings

unexpectedly increased in November.

Friday's non-farm payrolls data will give the most

definitive picture.

"Obviously the big theme of the week is higher U.S. yields,

and stronger dollar," said Samy Chaar, chief economist at

Lombard Odier.

"The U.S. cycle is an income-growth consumption-led cycle,

and when you look at it from that angle it gives a lot of

importance to labour markets - for it to continue people need to

have a job and incomes, and that's why the market reacted so

much to the (job openings) data."

"The second theme is the erratic and volatile political

comments."

European wind stocks took a beating Wednesday after Trump

called turbines 'garbage' while defence stocks gained

after he called for higher defence spending from NATO allies.

BRITISH SELLOFF

The reaction in British markets on Wednesday was more

dramatic than that elsewhere.

The British 10-year gilt yield rose over 11 bps

to 4.80%, its highest since 2008, while the pound fell 1.15%

against the dollar to $1.2335, and domestic-focused

British midcap stocks dropped 1.76%.

German 10-year Bund yields rose just 4 bps and the euro

EUR=EBS> dropped 0.5% to $1.0286.

"It seems there's a lot of negativity around the UK," said

Lyn Graham-Taylor, senior rates strategist at Rabobank

"This increase in yields is increasing the chance of the

fiscal headroom falling to nothing so there's an increased

probability of having to raise taxes or cut spending in the next

budget."

Asian stocks had struggled earlier in the day, with MSCI's

broadest index of Asia-Pacific shares outside Japan

dropping 0.57%.

Chinese markets were again the focus. Onshore blue-chips and

Hong Kong were each down 1.7% earlier in the day, but rebounded

and closed only just in negative territory as traders digested

Beijing's latest efforts to soothe investor nerves after a

stuttering economic start to the year.

In commodities, oil prices initially rose on reduced supply

from Russia and OPEC members, but then lost ground in the face

of the stronger dollar.

Brent crude was last up 0.1% at $77.16 per barrel,

while U.S. West Texas Intermediate (WTI) crude was flat

at $74.30.

(Additional reporting by Ankur Bannerjee in Singapore and Harry

Robertson in London. Editing by Mark Potter)