S&P 500 futures were already in negative territory heading into the report, but fell another 10 points when the Bureau of Labor Statistics said the unemployment rate rose to 6.1% from 5.7%. The economy shed 84k jobs in the month against the -75k consensus.

"With this report, there appears to be no end in sight to the distresses in the U.S. labour market, and little to suggest that the much longed-for improvement in labour market conditions is any closer. Moreover, it also suggests that the headwinds facing U.S. consumers are gaining strength," wrote Millan Mulraine, economics strategist at TD Securities in a client note.

The Treasury market rallied sharply as stocks sold off but later pared some of the gains. U.S. two-year yields are down 4.1 bps to 2.13%, with five-year yields down 4.8 bps to 2.81%, 10-year yields down 4.6 bps to 3.58% and 30-year yields down 3.8 bps to 4.22%. The Eurodollar March 09 contract is up 3.0 ticks to 97.20. The yield curve is flatter, with the 10/2-year spread down 1.1 bps to 143.57 bps.

U.S. equity market futures are lower with contracts on the Dow Jones industrial average down 77 points to 11123, the S&P 500 down 10 points to 1226 and the Nasdaq down 20 points to 1756.

European stock markets are also lower, with the Eurostoxx down 37 points to 2775, the UK FTSE 100 down 58 points to 5304 and the German DAX down 115 points to 6164.

Asian markets were lower, with the Japanese Nikkei closing down 345 points to 12212 and the Hang Seng Index down 456 points to 19933.

The foreign exchange market was volatile following the jobs figures. The U.S. dollar initially rallied, pushing the euro down more than a cent. The move was quickly reversed, suggesting short-covering was the culprit.

The Canadian dollar is in the midst of a strong session following a better-than-expected employment report. Statistics Canada said the economy added 15,200 in August and the unemployment rate held at 6.1%.

The Canadian dollar is up 0.0071 to 0.9411 against the U.S. dollar (1.0625 USD/CAD) and down 0.09 to 100.03 against the yen.

The U.S. dollar is down 0.79 to 106.29 against the yen and the Dollar Index is down 0.027 to 78.583.

The euro is down 0.0027 to 1.4298 against the U.S. dollar, down 0.0131 to 1.5190 against the Canadian dollar, down 0.0013 to 0.8088 against the pound sterling and is lower by 1.41 to 151.98 against the yen.

The pound sterling is down 0.0009 to 1.7676 against the U.S. dollar and down 0.0132 to 1.8784 against the Canadian dollar.

WTI crude oil is down $0.45 to $107.44. The front month gold contract at the Chicago Board of Trade is up $11.20 to $814.50 per ounce.

All data taken at 9:04 a.m. EDT.

By Adam Button, This email address is being protected from spam bots, you need Javascript enabled to view it , edited by Nancy Girgis, This email address is being protected from spam bots, you need Javascript enabled to view it

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