NEW YORK, June 5 (Reuters) - Wall Street wavered and crude prices jumped on Thursday as investors juggled new trade talks between U.S. President Donald Trump and Chinese President Xi Jinping against a spate of downbeat economic data ahead of Friday's crucial jobs report.
The three major U.S. stock indexes struggled for direction in early trade and were last modestly higher, while U.S. Treasury yields seesawed and the dollar weakened.
Trump held talks with Xi by phone on Thursday in an effort to iron out trade disputes between the world's two largest economies that have buffeted the global economy, and they agreed to further discussions, according to U.S. and Chinese summaries of their call.
"It's encouraging that the leaders have opened the lines of communication, but as the president said the other day, some of these negotiations are tough," said Matthew Keator, managing partner in the Keator Group, a wealth management firm in Lenox, Massachusetts.
"So I think the market is going to respond, moving up and down as we work through some of these negotiations and the market gets a better understanding of what it's going to look like at the end."
Economic data showed initial jobless claims hit the highest level since October, while a 16.3% drop in imports - arising from Trump's erratic tariff policy - resulted in the narrowest U.S. trade gap since November 2023.
Weaker-than-expected labor market data, including a 47% year-on-year jump in Challenger layoffs and a significant downside surprise in ADP's private payrolls, are dampening expectations for the Labor Department's closely watched May employment report expected on Friday.
But Keator believes the softer data could open the door for the Federal Reserve to implement more than one rate cut before the end of the year.
"With some of the more benign inflation numbers that have come through recently and a potential pick-up in jobless claims might give the Fed a little bit more cause to (cut interest rates) at least maybe more than once this year," Keator added.
"That could be an encouraging sign, particularly for some sectors."
The Dow Jones Industrial Average (.DJI), rose 9.64 points, or 0.02%, to 42,437.38, the S&P 500 (.SPX), rose 6.32 points, or 0.11%, to 5,977.13 and the Nasdaq Composite (.IXIC), rose 55.96 points, or 0.29%, to 19,516.24.
ECB CUTS RATES
As widely expected, the European Central Bank lowered its three key interest rates by 25 basis points, a decision based on its updated economic outlook now that inflation is currently around the central bank's 2% target.
Even so, European shares pared earlier gains after ECB President Christine Lagarde appeared to float the possibility of a summer pause in its year-long easing cycle.
MSCI's gauge of stocks across the globe (.MIWD00000PUS), rose 1.83 points, or 0.21%, to 890.76.
The pan-European STOXX 600 (.STOXX), index rose 0.1%, while Europe's broad FTSEurofirst 300 index (.FTEU3), rose 2.28 points, or 0.10%.
Emerging market stocks (.MSCIEF), rose 10.96 points, or 0.93%, to 1,183.41. MSCI's broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS), closed higher by 0.92%, to 623.59, while Japan's Nikkei (.N225), fell 192.96 points, or 0.51%, to 37,554.49.
The dollar reversed earlier gains in the wake of the soft U.S. economic indicators.
The dollar index , which measures the greenback against a basket of currencies including the yen and the euro, fell 0.24% to 98.56, with the euro up 0.43% at $1.1466.
Against the Japanese yen , the dollar strengthened 0.42% to 143.36.
U.S. Treasury yields seesawed in choppy trading following the unexpected increase in jobless claims.
The yield on benchmark U.S. 10-year notes rose 0.6 basis points to 4.371%, from 4.365% late on Wednesday.
The 30-year bond yield fell 1.6 basis points to 4.8725% from 4.888% late on Wednesday.
The 2-year note yield, which typically moves in step with interest rate expectations for the Federal Reserve, rose 1.2 basis points to 3.891%, from 3.877% late on Wednesday.
U.S. crude rose 1.48% to $63.78 a barrel and Brent rose to $65.74 per barrel, up 1.36% on the day.
Gold prices edged higher in opposition to the dollar as investors looked ahead to Friday's employment report.
Spot gold was flat to $3,375.58 an ounce. U.S. gold futures rose 0.1% to $3,376.90 an ounce.
Reporting by Stephen Culp; additional reporting by Marc Jones in London; editing by Mark Heinrich
