CORRECTED-GLOBAL MARKETS-U.S. jobs growth boosts dollar; bonds drop sharply
(Corrects to Labor Department in paragraph 2)
* Dollar climbs vs euro, yen after U.S. jobs data
* U.S. stocks edge up after strong payrolls data, Europe declines
* Bond prices sink as U.S. jobs growth surges past expectations
* Oil near four-month lows as Iran nuclear deal looms
By Herbert Lash
NEW YORK, Nov 8 (Reuters) - An unexpected surge in U.S. jobs growth during October boosted the dollar and sent U.S. Treasury bonds sharply lower on Friday by raising expectations the Federal Reserve could begin scaling back its economic stimulus as soon as December.
The Labor Department said there was no "discernible" impact on payrolls from the 16-day federal government shutdown last month. Employers added 204,000 new jobs, well above forecasts of 125,000, but the unemployment rate rose to 7.3 percent.
The department also revised upward by 60,000 its previous payroll reports for September and August.
"It's an impressively strong jobs number in the face of a government shutdown and underlying weakness in the U.S. economy," said Richard Franulovich, senior currency strategist at Westpac. "I have been dismissive of a December taper from the Federal Reserve, and now it looks like a possibility."
The dollar rose broadly, reversing a recent trend in which it has fallen on speculation the Fed would not start reducing its $85 billion a month in bond purchases until next year.
A Fed cutback at a time when the European Central Bank and Bank of Japan are in easing mode would boost the dollar's appeal.
U.S. stocks rose, shaking off an initial drop in futures after the unexpectedly strong payrolls report increased chances the Fed could soon scale back its stimulus, which has helped propel U.S. equities to record highs this year.
The dollar index, which tracks the greenback versus a basket of six currencies, rose 0.61 percent to 81.338, edging back toward a near two-month high of 81.46 on Thursday.
The euro fell 0.57 percent to $1.3341, having hit a session low of $1.3355, according to Reuters data.
U.S. Treasury prices fell. The benchmark 10-year U.S. Treasury note was down 36/32 in price to yield 2.7439 percent.
The Dow Jones industrial average was up 78.73 points, or 0.50 percent, at 15,672.71. The Standard & Poor's 500 Index was up 11.28 points, or 0.65 percent, at 1,758.43. The Nasdaq Composite Index was up 38.86 points, or 1.01 percent, at 3,896.19.
In Europe, the pan-regional FTSEurofirst 300 index fell 0.21 percent to 1,294.28. MSCI's all-country world index lost 0.12 percent.
Brent crude oil steadied under $104 a barrel, close to its lowest since early July, as Western powers stepped up efforts to reach a deal with Iran over its nuclear program that could provide some relief from sanctions.
Brent was up 34 cents at $103.80 a barrel. U.S. oil was up 2 cents at $94.22 a barrel.
(Additional reporting by Richard Hubbard in London; Editing by Dan Grebler)