GLOBAL MARKETS-Shares, dollar rally on U.S. jobs report

Fri Mar 8, 2013 11:17am EST

* Wall Street gains on better-than-expected February
payrolls report
    * European shares rise further, MSCI world index hits 4-3/4
yr high
    * Dollar touches 3-1/2-year peak against yen
    * U.S. Treasury yields jump after labor report


    By Herbert Lash
    NEW YORK, March 8 (Reuters) - World equity markets rallied
and the dollar strengthened on Friday after an unexpectedly
sharp jump in U.S. employment in February added to investor
sentiment that the world's biggest economy is gaining traction.
    Wall Street pushed the Dow index to a fourth consecutive
intraday record high, while European shares extended their gains
to a session high on the increase in hiring, which pushed the
U.S. unemployment rate to a four-year low of 7.7 percent.
    The dollar touched a 3-1/2-year high against the yen and a
three-month peak against the euro, while U.S. Treasuries sank on
the payrolls report.
    Nonfarm payrolls surged by 236,000 jobs in February, the
Labor Department said, handily beating economists' expectations
for a gain of 160,000.
    "The U.S. economy just hit it out of the park. The February
non-farm payrolls data was expected to show the economy moving
forward slowly but surely, not fast-forward like this," said
Jason Conibear, trading director at forex specialists Cambridge
Mercantile in Toronto.
    U.S. stocks pared early gains, led by a decline in JPMorgan
Chase, Bank of America and Goldman Sachs & Co.
The banks had advanced recently in anticipation of the Federal
Reserve's stress test results that showed they had enough
capital to withstand a severe economic downturn.
    "That is what people were expecting, so now these investors
are deciding to take some profits, and that's what is
happening," said Ken Polcari, director of the NYSE floor
division at O'Neil Securities in New York.
    The February report showed a labor market that continues to
move sideways at a frustratingly slow trend for the Fed, said
Ellen Zentner, senior U.S. economist at Nomura Securities in New
York.
    "This is not a report that is going to inspire any kind of
change in monetary policy, it is certainly not going to inspire
any kind of discussion around this stellar job report that makes
them decide to end QE earlier than expected," Zentner said.
    The Dow Jones industrial average was up 41.58 points,
or 0.29 percent, at 14,371.07. The Standard & Poor's 500 Index
 was up 3.54 points, or 0.23 percent, at 1,547.80. The
Nasdaq Composite Index was up 7.74 points, or 0.24
percent, at 3,239.83. 
    In Europe, the FTSEurofirst 300 index of top
regional shares was up 0.8 percent at 1,194.52.
    Earlier, MSCI's all-country world equity index
 rose to its highest level since late June 2008,
and Japan's Nikkei hit a 4-1/2 year high in Asian
trading.
    U.S. Treasuries also pared some early losses as Wall Street
retreated a bit. Yields have pushed steadily higher this week as
early data pointed to a bigger rise in payrolls than previously
expected and thus a swifter healing of the labor market.
    Prices for benchmark 10-year notes dropped 18/32
after the data to yield 2.0558 percent.
    The euro fell against the dollar, erasing gains from
Thursday, when European Central Bank President Mario Draghi gave
less-dovish policy signals than expected.
    The euro fell 0.9 percent to $1.2986. 
    Against the yen the dollar climbed as high as 96.54
yen, the highest since August 2009. It was last at 96.15 yen, up
1.4 percent in its biggest one-day gain since Feb. 11. 
    Brent crude oil futures fell below $110 a barrel, pressured
by a stronger dollar after the U.S. jobs report,
higher-than-expected supply from the North Sea and OPEC, and
investors selling out of commodities in favor of equities.
    Brent futures were down $1.25 to $109.90 a barrel.
Brent is down for the fourth consecutive week, its longest
weekly losing streak since May 2012.  
    U.S. oil was down 45 cents to $91.11.
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