US job surge dents shares

WASHINGTON - An unexpectedly strong surge in job creation in the US last month sent bond and share prices skidding, writes Rupert Cornwell.

Financial markets took the news as a further indication the Federal Reserve is likely to push interest rates higher, perhaps this month. Labor Department figures showed the overall unemployment rate climbed 0.1 per cent to 6.1 per cent in July.

Until yesterday, the likelihood had been that the central bank would leave key short-term rates at 4.25 and 3.5 per cent until September.

Now some economists believe increases could come sooner, and predict the Fed will opt to boost Fed funds by a full half-point, instead of a mere quarter-point - the pattern since it began to nudge rates higher in February.