* Stocks, euro fall as ECB disappoints markets
* Safe-haven Treasuries rise, oil slips
* Markets still expect Fed, ECB action in coming months
* U.S. jobs data due Friday, markets expect 100,000 gain
NEW YORK, Aug 2 (Reuters) - Global stocks and the euro
tumbled o n T hursday after the European Central Bank disappointed
investors who were hoping for immediate action to combat the
euro zone debt crisis.
The ECB signaled plans to push down borrowing costs for euro
zone countries through upcoming bond purchases, though the move
is likely weeks away.
The central bank, which said it would wait to see if the
euro zone economy slows further before cutting interest rates,
pledged last week it would do what it takes to support the euro.
The U.S. Federal Reserve took a similar wait-and-see
approach o n W ednesday and did not announce any new stimulus
measures to help revive a flagging U.S. recovery. Data on Fr iday
is expected to show the U.S. economy added 100,000 jobs in July,
not enough to lower an 8.2 percent jobless rate.
ECB President Mario Draghi "set us up like a poker room full
of suckers," said Todd Schoenberger, managing principal at the
BlackBay Group in New York. "We were all expecting a
The Dow Jones industrial average closed down 92.18
points, or 0.71 percent, at 12,878.88. The Standard & Poor's 500
Index fell 10.14 points, or 0.74 percent, to 1,365.00.
The Nasdaq Composite Index fell 10.44 points, or 0.36
percent, to 2,909.77.
The euro, which had rallied above $1.24, beat a quick
retreat to $1.2132 for its biggest one-day move in a year.
It last changed hands at $1.2178, down 0.4 percent.
Safe-haven U.S. Treasuries rose, with the benchmark 10-year
note up 12/32 to yield 1.48 percent, while Spanish
and Italian bond yields rose and European shares fell.
The FTSEurofirst 300 index closed 1.2 percent lower
and the MSCI world stock index lost 1.0 percent.
Spanish and Italian stocks were hit
especially hard, with indexes falling around 5 percent each.
Reuters reported on Monday that the ECB was considering
re-activating its Securities Markets Programme to buy Spanish
bonds in tandem with the euro zone's rescue funds, but that
action could be at least five weeks away.
"Draghi put himself in such a difficult position," said
Joshua Raymond, chief market strategist at City Index. "There
has been a swift change in the rhetoric from 'we will' last week
to 'we may' today.
Brent crude oil settled 6 cents lower at $105.90 a barrel,
while U.S. crude fell in tandem with stocks and other
growth-sensitive assets to settle down $1.78 at $87.13. Spot
gold fell $10.25 to $1,588.30
LAYING THE GROUNDWORK
Since Draghi surprised markets last week with a promise to
save the euro, European shares had rallied by as much as 5
percent, the euro has risen about a cent against the dollar and
yields on Italian and Spanish debt had fallen sharply.
Some, though, said the ECB president made clear that
policymakers are serious about helping indebted countries such
as Spain and Italy and stopping the crisis from worsening.
"What he said was pretty significant. He seems to have laid
the groundwork for substantial policy action," said Andrew
Wilkinson, chief economic strategist at Miller, Tabak & Co. "It
wouldn't surprise me if we get a risk rally in the days ahead."
Stephen Jen, managing partner at SLJ Macro Partners, said
the market expected too much.
"The market demanded short-term fixes. I think this reflects
how the markets have been conditioned by the Fed's repeated
(stimulus) operations. Investors have now been reminded that
there are no quick fixes for the problems in Europe."
The Fed has been much quicker than its euro zone counterpart
to pump money into the financial system. It has already bought
assets to the tune of $2.3 trillion and pledged to keep interest
rates at zero until at least late 2014.
Though it stood pat this week, it said it was ready to act
if necessary. Investors expect it could launch another round of
bond purchases as soon as September.
The U.S. economy lost momentum in the second quarter as the
pace of hiring slowed and consumer confidence weakened.
Data Thursday showed the number of Americans filing initial
claims for unemployment benefits rose slightly in the latest
week, though less than economists had expected.