By Sinead Carew
NEW YORK (Reuters) - U.S. stocks fell for a second day and the dollar dipped after a weaker-than-expected report on private sector employment spurred investor concerns that a highly anticipated monthly U.S. jobs report on Friday could also point to slowing economic growth.
However, oil futures rallied as talks over Iran's nuclear program continued, curbing expectations of an immediate deal that would allow Iranian crude on to the market. [O/R]
The ADP National Employment Report showed that U.S. private employers added 189,000 jobs last month, well below economists' expectations for 225,000 jobs. The report was the weakest since January 2014.
The employment data also dragged down U.S. Treasuries yields as investors bet that the Federal Reserve may not raise rates until the end of 2015
"The correlation between ADP and the payroll report isn?t terribly strong, but given the size of the miss, this could cause investors to pause and reassess the landscape," said David Lebovitz, global market strategist for J.P. Morgan Asset Management in New York.
At 11:22 a.m. EDT (1522 GMT), the Dow Jones industrial average <.DJI> fell 76.6 points, or 0.43 percent, to 17,699.52, the S&P 500 <.SPX> lost 7.47 points, or 0.36 percent, to 2,060.42 and the Nasdaq Composite <.IXIC> dropped 25.44 points, or 0.52 percent, to 4,875.45.
The rebound in oil prices helped boost the S&P 500 index's energy sector, making it one of three sectors to show gains for the benchmark index on Wednesday.
After a decline on Tuesday, Europe's benchmark FTSEurofirst 300 <.FTEU3> recovered and was up 0.45 percent. London's FTSE <.FTSE> was up 0.6 percent, Germany's DAX <.GDAXI> rose 0.3 percent and France's CAC <.FCHI> was up 0.71 percent after euro zone manufacturing data was revised higher.
Euro zone bonds remained in favor as the European Central Bank pushed on with its 1 trillion euro buying plan, while oil was under pressure
Data from China was less robust, bolstering a view that Beijing has to provide more stimulus to keep growth on track, with some analysts eyeing moves to directly push down the yuan's value.
The HSBC/Markit China Manufacturing Purchasing Managers' Index (PMI) came in at 49.6, slightly higher than a preliminary "flash" reading of 49.2, but still below the 50-mark separating contraction from expansion.
An employment subindex contracted for a 17th straight month, falling to its lowest since August 2014.
Japan's Nikkei sank 0.9 percent after a lacklustre Bank of Japan business survey.
After Greece failed on Tuesday to reach an initial deal on reforms with its lenders, the Athex General Composite Share Price index <.ATG> was down 1.3 percent.
The Iran nuclear talks pushed Brent crude
"A lot of people were expecting the deal to be done overnight and Iran to be pumping a million barrels tomorrow. That's not going to be the case," said Amrita Sen, chief oil analyst at Energy Aspects.
(Additional reporting by Ryan Vlastelica in New York and Mimanshu Ojha in London; Editing by Tom Heneghan and Bernadette Baum)