GLOBAL MARKETS-Equities fall with US Treasury yields after data, oil sinks

Updates prices to late afternoon, adds oil settlement

By Sinéad Carew and Elizabeth Howcroft

NEW YORK/ PARIS, Dec 16 (Reuters) - MSCI's global equities gauge fell on Tuesday and 10-year U.S. Treasury yields were lower for a second day as investors assessed the latest U.S. jobs data, while oil prices sagged on hopes for a Russia-Ukraine peace deal.

The U.S. Labor Department reported a nonfarm payroll increase of 64,000 jobs last month and that the unemployment rate rose to 4.6%. November represented a bounce-back from October's 105,000 jobs decline, which included the departure of more than 150,000 federal employees who took deferred buyouts as part of the Trump administration's push to shrink the government's footprint.

However, the clouding of the data from the 43-day U.S. government shutdown through October and into mid-November created some uncertainty about what the report means for the economy and the Federal Reserve's outlook for interest rate policy after its 25-basis-point cut last week.

JOBS DATA 'NOT TOO BAD, NOT TOO GOOD'

While relatively low wage growth and anaemic November job creation provided hope for more Fed rate cuts, David Wagner, portfolio manager at Aptus Capital Advisors, said the return to job increases in November could also support more hawkish views that rates should hold steady.

"Investors are still trying to digest this data. The jobs report was somewhat Goldilocks - not too bad and not too good. Both hawkish and dovish investors have enough data to prove their current thesis," Wagner said while also pointing to "the noise in the data given that the shutdown continued into the middle of November."

While the Fed's estimate last week was for one rate cut for 2026, traders have been betting on two or more cuts, according to CME Group'sFedWatch tool.

While their bets were little changed after Tuesday's data, Adam Rich, deputy CIO and portfolio manager at Vaughan Nelson, said that the stock market's decline suggests some confusion about the outlook for rates.

"The market is having a really hard time figuring out how many interest rate cuts we're going to get from the Fed," Rich said. "The jobs data is looking a little stronger than what people were expecting, but it's also low enough that we could probably get more cuts in the near future than what the market is expecting. But maybe investors were hoping that it would be weaker than expected so that cuts would be coming more aggressively."

On Wall Street at 2:49 p.m. ET (1949 GMT), the Dow Jones Industrial Average .DJI fell 351.99 points, or 0.73%, to 48,064.57, the S&P 500 .SPX lost 29.26 points, or 0.43%, to 6,787.25 and the Nasdaq Composite .IXIC fell 10.04 points, or 0.04%, to 23,047.11.

MSCI's gauge of stocks across the globe .MIWD00000PUS fell 5.98 points, or 0.59%, to 1,001.78, while earlier, the pan-European STOXX 600 .STOXX index finished down 0.47%.

Earlier, stocks had declined during Asian trading, with MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS dropping 1.3% and touching its lowest in three weeks.

CENTRAL BANK MEETINGS, MORE DATA

Investors are also waiting for U.S. inflation data and central bank meetings, including rate policy decisions from the Bank of England, the European Central Bank and the Bank of Japan this week.

U.S. Treasury yields fell as traders attributed an unexpected increase in the unemployment rate last month to possible government shutdown-related distortions.

The yield on benchmark U.S. 10-year notes US10YT=RR fell 3.5 basis points to 4.147%, from 4.182% late on Monday, while the 30-year bond US30YT=RR yield fell 3 basis points to 4.8222%.

The 2-year note US2YT=RR yield, which typically moves in step with interest rate expectations for the Federal Reserve, fell 2.9 basis points to 3.479%, from 3.508% late on Monday.

In currencies, the U.S. dollar fell against major peers on Tuesday after expectations for Fed rate cuts stayed intact after the jobs report.

The dollar index =USD, which measures the greenback against a basket of currencies including the yen and the euro, fell 0.14% to 98.12.

The euro EUR= was up 0.07% at $1.176, while against the Japanese yen JPY=, the dollar weakened 0.37% to 154.63.

Sterling GBP= strengthened 0.42% to $1.3429, although unemployment in Britain hit its highest since the start of 2021 and wage growth in the private sector was the weakest in nearly five years last month, according to the latest data.

In cryptocurrencies, bitcoin BTC= gained 1.62% to $87,625.91 after falling sharply on Monday.

Oil prices fell, with Brent futures trading below $60 a barrel for the first time since May, as traders considered a Russia-Ukraine peace deal as more likely, raising expectations that sanctions could be eased, which could lead to more oil availability and therefore lower prices.

U.S. crude CLc1 settled down 2.73%, or $1.55, at $55.27 a barrel while Brent LCOc1 ended at $58.92 per barrel, down 2.71%, or $1.64.

In precious metal markets, gold prices advanced with support from the weaker dollar and bets that a rising U.S. unemployment rate would boost the chances for more Fed rate cuts. Spot gold XAU= rose 0.27% to $4,312.98 an ounce. U.S. gold futures GCc1 rose 0.34% to $4,321.40 an ounce.

(Reporting by Sinéad Carew in New York, Elizabeth Howcroft in Paris; Editing by Sharon Singleton, Susan Fenton, Rod Nickel)

((sinead.carew@thomsonreuters.com))