GLOBAL MARKETS-Equities sink with AI rout extended, bond yields dip, silver savaged further

Updates to U.S. trading hours

By Sinéad Carew and Marc Jones

NEW YORK/ LONDON, Feb 5 (Reuters) - MSCI's global equities gauge went into reverse on Thursday as Wall Street worries about the enormous cost of the AI boom deepened and U.S. Treasuries were in demand after weak labor market data, while silver took a hammering and oil fell.

With the closely watched non-farm payrolls report delayed until next week due to a brief U.S. government shutdown, investors were paying close attention to alternative employment data.

Treasury yields lost ground after data showed new applications for unemployment benefits rising more than expected last week. And yields extended losses after the Labor Department's Bureau of Labor Statistics' Job Openings and Labor Turnover Survey (JOLTS) 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.

Separately, recruitment firm Challenger, Gray & Christmas said layoffs announced by U.S. employers surged in January amid losses 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 chief market strategist Anthony Saglimbene said investors are worried about how much technology companies say they need to spend to support artificial intelligence $(AI)$ demand.

The latest example is Google parent Alphabet's GOOGL.O announcement on Wednesday of a 2026 capex spending plan of as much as $185 billion - 55% more than analysts expected.

And while the stock market has benefited this year from investor rotation into cyclical stocks besides technology, continuous pressure on technology is eating at investors' broader risk appetites, he 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," Saglimbene said.

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

On Wall Street at 11:44 a.m. ET (1644 GMT), the Dow Jones Industrial Average < .DJI > fell 489.19 points , or 0.99 %, to 49,012.11 , the S&P 500 < .SPX > fell 61.34 points , or 0.89 %, to 6,821.38 and the Nasdaq Composite < .IXIC > fell 207.66 points , or 0.91 %, to 22,696.92 .

MSCI's gauge of stocks across the globe < .MIWD00000PUS > fell 10.12 points , or 0.97 %, to 1,029.93 .

The pan-European STOXX 600 < .STOXX > index fell 1.07%.

In currencies, the dollar index < =USD >, which measures the greenback against a basket of currencies including the yen and the euro, rose 0.14% to 97.82 , with the euro < EUR= > down 0.09% at $ 1.1795 .

Against the Japanese yen < JPY= >, the dollar strengthened 0.04% to 156.91 .

The yen has fallen for four straight days ahead of a general election on Sunday where 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.

Sterling < GBP= > weakened 0.74% to $ 1.3547. The Bank of England kept rates at 3.75% but an unexpectedly close 5-4 vote had traders pricing in a much higher chance of a near-term rate cut, which nudged gilt yields lower along with the pound. /FRX

Meanwhile, the European Central Bank left euro zone rates at 2% and offered no immediate clues about its next move, reinforcing bets of nothing for a while.

A prolonged selloff in bitcoin showed no sign of stopping as it dropped below $70,000 to its lowest since late 2024. Bitcoin < BTC= > was last down 6.89% at $ 67,617.82 .

In Treasuries , the yield on benchmark U.S. 10-year notes < US10YT=RR > fell 6.2 basis points to 4.216 % from 4.278 % late on Wednesday, while the 30-year bond < US30YT=RR > yield fell 5.1 basis points to 4.8643 %.

The 2-year note < US2YT=RR > yield, which typically moves in step with interest rate expectations for the Federal Reserve, fell 6.5 basis points to 3.494 %, from 3.559 % late on Wednesday .

SILVER SLUMPS 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= > fell 12.81% to $ 76.76 an ounce after earlier falling as low as $72.21, while spot gold < XAU= > fell 1.75% to $ 4,875.65 an ounce.

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

U.S. crude CLc1 fell 2.82% to $ 63.28 a barrel and Brent LCOc1 fell to $ 67.54 per barrel, down 2.76% on the day.

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

((sinead.carew@thomsonreuters.com))