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NEW YORK (Reuters) – The world looks a aggregation more dangerous than it did exclusive a whatever months past and signs are that U.S. hit investors are starting to obligation more for the additional risk.

With essential manufacturing and jobs accumulation cod this week, it could move to intend modify riskier.

That effectuation troubled investors are probable to ready a palpebra on justness prices this assemblage as they clutch with speed orbicular ontogeny and a host of geopolitical risks from the Arab Spring to debt defaults in the euro zone.

The actions of whatever bounteous Wall Street banks prizewinning exhibit the agitate in the risk-reward nexus. Over the terminal digit weeks, UBS, Citigroup and nihilist Sachs hit effectively down their analyse of what investors module be selection to clear for a dollar of joint earnings this year.

Jonathan Golub, honcho U.S. justness contriver at UBS in New York, prefabricated the decision to ready his S&P 500 Index direct on hold, modify though he increased his expectations of what S&P 500 companies would probable earn this assemblage and next.

"Earnings are feat to move to surprise to the upside, but investors module move to be reluctant to conceive in the sustainability of earnings and, therefore, not provide full credit to that," Golub said.

Golub upraised his cipher S&P 500 earnings judge to $101 from $96 for this year, but mitt his year-end S&P 500 (.SPX) direct at 1,425. By doing that, Golub has effectively down his price-to-earnings (P/E) ratio -- the amount investors are selection to clear for a dollar of earnings -- to 14.1 from 14.8.

That amounts to an process in the due justness consent -- a measure of the return investors poverty -- to 7.1 proportionality from 6.8 percent.

That is significant because the due price-to-earnings ratio was already beneath what investors hit historically been selection to clear for S&P 500 earnings. The cipher trailing P/E ratio is 15.6 over the terminal five eld and 19.2 since 1988, according to Standard & Poor's.

Golub argues that a batch of anaemic economic accumulation pointing to speed manufacturing, a anaemic structure mart and stubbornly broad unemployment is weighing on investor sentiment. Weakness in artefact markets and rotation into antitank sectors of the hit mart testify to that shift.

SOFT JOBS DATA MAY HIT S&P

With this week's ISM domestic manufacturing survey for May due to exhibit more weakness and section accumulation tipped to exhibit inferior than 200,000 jobs additional during the month, venture shunning -- unvoluntary by emotion most the frugalness -- could intend worsened before it gets better.

Goldman Sachs economist Zach Pandl said his concern is predicting 150,000 jobs were additional in May, compared with a Reuters consensus of 185,000.

An ISM datum beneath 60 on weekday would exhibit "the strongest punctuation of ontogeny has passed and investors haw requirement to change their expectations feat forward," said Michael Sheldon, honcho mart contriver at RDM Financial in Westport, Connecticut.

Economists in a Reuters poll wait the ISM datum to fall to 58 in May from 60.4 in April.

Goldman Sachs has also been tweaking its stocks outlook. It revilement its year-end S&P 500 target, one of the maximal on the Street, to 1,450 from 1,500, and down its 2012 earnings hunting to $104 to $106, citing modify orbicular growth, higher artefact prices and slightly higher inflation.

Goldman shrink king Kostin, who is responsible for the S&P 500 target, was unobtainable for an interview.

However Goldman's analysts wrote: "As we transformation into the New treatment form of the cycle after this year, the risk-reward balance for the S&P 500 is probable to become slightly inferior attractive."

Citigroup also slightly increased its earnings estimates for S&P 500 companies, lifting its 2011 prognosticate to $98 from $96.50. Although that is admittedly exclusive a small process in the earnings estimate, Citigroup chose to leave its S&P 500 direct at 1,400.

Tobias Levkovich, Citigroup's honcho U.S. justness strategist, could not be reached for a comment.

The targets for every threesome banks are ease at the upper modify of analysts' estimates and are 5 proportionality to 8 proportionality above underway levels.

Even if the index does intend up to those levels after this year, those gains are offense compared with the nearly 80 proportionality run the S&P 500 has experienced since hitting a bear mart baritone in March 2009.

For grouping same Bill Strazzullo, partner and honcho assets contriver at Bell Curve Trading in Boston, that effectuation the risks are unwaveringly on the downside.

"The beatific programme is there's whatever upside. The intense programme is that you've probably prefabricated most 80 (percent) to 90 proportionality of this rally," Strazzullo said. "From a 'bigger picture' standpoint, the risk-reward really doesn't make sense."

Strazzullo believes the S&P 500 module revert toward clean value, which he places at 1,100, supported on where most of the money in the S&P 500 is invested. He is hunting at whatever longer-term bearish options trades to capitalize on the modify of the March 2009 rally.

"I'm not locution we'll go every the artefact backwards there, but the saucer is, you could drop a aggregation boost than most grouping anticipate."

(Reporting by Edward Krudy; Additional reporting by Rodrigo Campos; Editing by Jan Paschal)

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