By Riva Gold 

LONDON--Global stocks extended losses while the dollar continued to rebound Wednesday ahead of key readings on the U.S. economy.

Futures pointed to a 0.7% opening loss for the S&P 500. Changes in futures don't necessarily reflect market moves after the opening bell.

Later in the day, investors will examine a raft of U.S. data including readings on the services sector, the trade balance, and the ADP employment report ahead of the closely watched nonfarm payrolls figures on Friday.

Shares of resource companies led declines in Europe and Australia as metals prices retreated. The Stoxx Europe 600 was down 0.9% halfway through the session, while London's FTSE 100 fell to its lowest level in over three weeks.

Shares in BHP Billiton fell around 7% after Brazilian federal prosecutors filed a lawsuit against the Anglo-Australian miner as well as Vale SA and Samarco Mineração over a dam failure in November. Metals prices also edged lower, weighing on the sector, as the dollar continued to rebound from multimonth lows.

The euro was down 0.2% against the dollar at $1.1479, while the dollar was up 0.1% against the yen at Yen106.8340. The British pound fell 0.5% against the dollar to $1.4469.

"The level of the dollar will be critical to how well the market performs," said Patrick Spencer, vice chairman of equities at Robert W. Baird & Co. While he expects it to remain near its current levels, any meaningful recovery of the dollar would hurt stocks around the world, he added.

A stronger dollar weighed on U.S. company profits in the first quarter of the year, and could hinder a recent rally in commodities, analysts say.

Investors had ramped up bets against the dollar in recent weeks, after the U.S. economy grew slower than expected in the first quarter and the Fed signaled it would raise interest rates at a gradual pace.

But that trend began to reverse Tuesday after comments from Federal Reserve Bank of Atlanta leader Dennis Lockhart and Federal Reserve Bank of San Francisco President John Williams heightened concerns about a rate rise this year.

Earlier, shares in Asia mostly ended lower, weighed by losses on Wall Street and recent declines in the oil price. Australia's S&P ASX 200 fell into negative territory for the year, while shares in Hong Kong ended down 1%. Shares in Shanghai were little changed, while markets in Japan were closed for a holiday.

Wall Street closed lower Tuesday for the third time in four sessions, underlying investors' concerns about the sustainability of a recovery in stocks that started in February.

"After a relief rally supported by really reflationary central bank policy, gravity is taking us back down to earnings, which are hardly robust," said Tina Byles Williams, chief investment officer at FIS Group. Companies are beating lower expectations, but comparisons with prior periods aren't encouraging, she added.

In Europe, shares in Royal Dutch Shell PLC, Air France-KLM, and Anheuser-Busch InBev NV all fell after the companies reported downbeat first-quarter earnings, while France's Société Générale SA reported an increase in first-quarter net profit, sending shares of the lender up 3.7%.

In economic news, eurozone retail sales fell in March for the first time in five months, data showed Wednesday, while the region's composite purchasing managers index was largely unchanged.

In commodities, Brent crude oil was up 0.1% at $45.01 a barrel, after falling over 6.5% this week. Key supply data from the U.S. Department of Energy is due later Wednesday.

Copper prices in London fell 0.4% to $4,888 a ton, while gold was down 0.6% at $1284.20 an ounce.

Write to Riva Gold at riva.gold@wsj.com

 

(END) Dow Jones Newswires

May 04, 2016 07:37 ET (11:37 GMT)

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