imageNEW YORK: The dollar tumbled and benchmark US Treasury yields touched multi-week lows on Friday as an unexpectedly weak government reading of American labor costs dulled prospects for higher US interest rates.

Wall Street stock prices rose, also taking a cue from the Employment Cost Index data showing the smallest quarterly increase in 33 years. Oil prices declined for a second day on growing worries about global oversupply.

The dollar index declined 0.7 percent, with the basket of major currencies heavily weighed down by a 1 percent jump in the euro to $1.1036.

The index, which has been rising steadily, earlier touched a near one-week high.

Treasuries prices rallied, with yields on benchmark 10-year Treasury notes falling to a three-week low of 2.2550 percent with the price rising by 17/32 of a point.

The 30-year Treasury bond yield fell to a fresh two-month low of 2.9040 percent from a yield of 2.9390 percent prior to the data.

The price was last up 29/32 of a point.

The Employment Cost Index, which is the broadest measure of labor costs, rose just 0.2 percent last quarter, the US Labor Department reported.

Economists had forecast a 0.6 percent rise in the report, which follows a GDP report widely seen as allowing the Federal Reserve to hike rates beginning as early as September.

“The magnitude of the miss was definitely a bit of a surprise, especially as people were really gearing up for a September (rate) hike.

This definitely puts a lower probability on that," said Stanley Sun, interest rate strategist at Nomura Securities International in New York. Wall Street's Dow Jones industrial average rose 3.14 points, or 0.02 percent, to 17,749.12, the S&P 500 gained 3.44 points, or 0.16 percent, to 2,112.07 and the Nasdaq Composite added 22.40 points, or 0.44 percent, to 5,151.18.

European shares fell slightly with commodity stocks leading the market lower, but remained on track for a 4-percent monthly rise with worries receding about Greece's membership of the euro area.

China's CSI300 index ended flat after a late dip to leave it down 14.7 percent on the month.

The Shanghai Composite Index lost 1 percent, extending its July losses to 13.4 percent despite recent support measures by the country's authorities. China's securities regulator said on Friday it was investigating the impact of automated trading on the market and had clamped down on 24 trading accounts found to have abnormal bids for shares or bid cancellations.

Crude oil also slipped for a second session as concern over global oversupply intensified after the head of the OPEC oil exporters' cartel indicated there would be no cutback in production.

Brent crude oil was down 50 cents at $52.81 a barrel. US light crude CLc1 was down 75 cents at $47.81 a barrel

Copyright Reuters, 2015