Updates prices to late U.S. session with oil settlement

By Sinéad Carew and Marc Jones

NEW YORK/ LONDON, Feb 5 (Reuters) - MSCI's global equities gauge fell 1% on Thursday as worries deepened about the enormous cost of the artificial intelligence boom, while U.S. Treasuries were in demand after weak labor market data and in commodities, silver took another hammering.

Oil prices ended their session nearly 3% lower after the U.S. and Iran agreed to hold talks in Oman on Friday, easing concerns around any bottlenecks in Iranian crude supplies.

Treasury yields fell after data showed new applications for unemployment benefits rising more than expected last week. Yields extended losses after the Labor Department's Bureau of Labor Statistics' Job Openings and Labor Turnover Survey report showed U.S. job openings dropping to the lowest level in more than five years in December, while prior month data was revised lower.

Recruitment firm Challenger, Gray & Christmas said layoffs announced by U.S. employers surged in January amid a loss of business contracts and an uncertain economic environment, marking the highest level for the month in 17 years.

Along with the disappointing labor market data, Ameriprise Financial chief market strategist Anthony Saglimbene said investors were worried about how much technology companies are spending to support AI demand.

Most recently, Google parent Alphabet GOOGL.O announced a 2026 capex spending plan of as much as $185 billion - 55% more than analysts expected - sending its shares down almost 3% even after it reported solid quarterly results.

While the stock market has seen support from recent investor rotation into cyclical stocks, continuous pressure on technology stocks is eating at investors' broader risk appetites, Saglimbene said.

"If big tech and AI lose more momentum, it's likely that broader averages like the S&P 500 will see more pressure. There's good rotation happening but not enough to hold up the broader averages the way it has so far this year," he said.

"Investors today are starting to turn more defensive in their positioning because the market is starting to lose momentum."

On Wall Street at 3:06 p.m. ET (2006 GMT) the Dow Jones Industrial Average .DJI fell 470.30 points, or 0.95%, to 49,031.00, the S&P 500 .SPX fell 64.08 points, or 0.93%, to 6,818.64 and the Nasdaq Composite .IXIC fell 268.02 points, or 1.17%, to 22,636.55.

MSCI's gauge of stocks across the globe .MIWD00000PUS fell 10.73 points, or 1.03%, to 1,029.32.

Earlier the pan-European STOXX 600 .STOXX index finished down 1.05% as investors weighed mixed earnings reports.

"You've had a trade in markets that's been one way with regards to tech and anything AI related and with precious metals. You're seeing a pretty significant unravelling of it within software and you're seeing precious metals come off and seeing bitcoin sell off," said Brian Levitt, chief global market strategist at Invesco. He said he was still bullish on risk assets in an economy that is likely to stay strong.

"We're just in a pocket right here, following a fairly significant advance," Levitt said.

BOE, ECB RATE DECISIONS

In currencies, the U.S. dollar hit a nearly two-week high as investors ran from equities while the pound tumbled after a razor-thin Bank of England vote left UK rates unchanged and the central bank signalled a rate reduction ahead if an expected drop in inflation is sustained.

Sterling GBP= weakened 0.77% to $1.3545 as traders priced in a much higher chance of a near-term rate cut. This nudged gilt yields lower along with the pound./FRX

The dollar index =USD, which measures the greenback against a basket of currencies including the yen and the euro, rose 0.16% to 97.84, with the euro EUR= down 0.13% at $1.1791.

Against the Japanese yen JPY=, the dollar strengthened 0.03% to 156.9.

The yen has fallen for four straight days ahead of a general election on Sunday in which polls are pointing to a decisive victory for Prime Minister Sanae Takaichi, endorsing her spending ambitions that have raised concerns about the nation's strained finances.

The European Central Bank left euro zone rates at 2% and offered no immediate clues about its next move, reinforcing bets of no changes for a while.

A prolonged selloff in bitcoin showed no sign of stopping as the cryptocurrency dropped below $70,000 to its lowest since late 2024. Bitcoin BTC= fell 10.48% to $65,011.26.

In Treasuries , the yield on benchmark U.S. 10-year notes US10YT=RR fell 6.6 basis points to 4.212%, from 4.278% late on Wednesday while the 30-year bond US30YT=RR yield fell 5.1 basis points to 4.864%.

The 2-year note US2YT=RR yield, which typically moves in step with interest rate expectations for the Federal Reserve, fell 7.4 basis points to 3.485%.

SILVER, OIL SLUMP AGAIN

In precious metals, silver and gold fell again. Both metals were coming off two days of gains that recouped some losses from last week's plunge from record highs.

Spot silver XAG= was down 15.28% at $74.59 an ounce after earlier falling as low as $72.21, while spot gold XAU= fell 2.78% to $4,824.32 an ounce.

In energy markets, U.S. crude CLc1 settled down 2.84%, or $1.85, at $63.29 a barrel while Brent LCOc1 settled at $67.55 per barrel, down 2.75%, or $1.91 on the day.

(Reporting by Sinéad Carew in New York, Marc Jones in London, Stella Qiu in Singapore. Editing by Toby Chopra, Mark Potter, Andrew Heavens and Nia Williams)

((sinead.carew@thomsonreuters.com))