U.S. private employers unexpectedly cut 10,000 jobs in August compared to a revised gain of 37,000 in July, a report by a payrolls processor showed on Wednesday.

KEY POINTS: * The July figure was originally reported as a gain of 42,000. * The median of estimates from 34 economists surveyed by Reuters for the ADP Employer Services report, jointly developed with Macroeconomic Advisers LLC, was for a rise of 19,000 private-sector jobs in August.

COMMENTS:

JIM BARRETT, SENIOR MARKET STRATEGIST, LIND-WALDOCK, CHICAGO:

Technically we found a range in notes and bonds and a floor on yields.

This news just wasn't negative enough. The backdrop with the recent data has been so negative anyway so the market is ignoring it.

WILLIAM LARKIN, PORTFOLIO MANAGER, CABOT MONEY MANAGEMENT, SALEM, MASSACHUSETTS:

Treasuries were soft coming into the ADP data and they rebounded slightly because the number was worse than expected.

There is a critical trio: employment, inflation and housing. For the Treasury market right now the worst possible thing would be a sign of an unexpected recovery, because the market has priced in a double dip recession.

NED RILEY, CHIEF EXECUTIVE OFFICER, RILEY ASSET MANAGEMENT, BOSTON:

The number is within what I'd call a statistical error, but of course it'd be more encouraging to have a positive number. The revision down last month is discouraging, but I'm not too discouraged yet. Clearly, last month was a bad month. We already know that. And we know that some of the numbers are clearly going to be bad. I'm still very concerned about Friday's report, because of the impact of census workers, but the ADP report doesn't change my thinking about what to expect. Friday's number was already supposed to be significantly on the downside.

SHAUN OSBORNE, SENIOR CURRENCY STRATEGIST, TD SECURITIES, TORONTO:

It was expected to be weak, and we are seeing signs that the U.S. economy is pulling back here a bit, so it's in keeping with that kind of flow of information. We haven't seen much reaction in the stock market. It will be interesting to see whether the report knocks risk appetite down, and I think there's a chance that may happen. But so far, the currency reaction has been minimal, and I think people may be waiting to see the ISM data later this morning.

OMER ESINER, CHIEF MARKET ANALYST, COMMONWEALTH FOREIGN EXCHANGE, WASHINGTON:

Definitely a negative headline number here and it is likely to reduce some of the market's risk appetite we saw in overnight trade. Initially I expect the dollar to extend its losses against the yen but trim some of its losses against higher risk currencies, including the euro. This number will dull some of the mood in the market and weigh on sentiment leading up to the payrolls data on Friday.

MARKET REACTION: STOCKS: U.S. stock index futures trim gains after ADP employment data. BONDS: U.S. Treasury debt prices trim losses. DOLLAR: U.S. dollar extends losses versus yen.

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