* Strong jobs growth sends dollar up vs yen
* U.S. stocks set new record highs on jobs data
* Brent rises above $104, U.S. unemployment at 4-year low
* Government debt slumps on strong U.S. jobs report
By Herbert Lash
NEW YORK, May 3 (Reuters) - The U.S. dollar rose over 1.0 percent against the yen and global equity markets rallied on Friday, pushed higher by an American labor report showing stronger jobs growth in April than expected, data that lifted U.S. stocks to a new record high.
U.S. nonfarm payrolls rose 165,000 last month and the jobless rate fell to a four-year low of 7.5 percent, the Labor Department said. Economists expected payrolls to rise 145,000 and the unemployment rate to hold steady at 7.6 percent.
Wall Street stocks surged at the open and European shares rallied more than 1.0 percent on news of the resilient U.S. labor market. The drop in the U.S. jobless rate reflected a gain in employment, rather than people leaving the workforce.
The benchmark S&P 500 stock index broke through the 1,600 mark for the first time, and the Dow was less than 50 points from surpassing the 15,000 mark as both indices set record highs.
Crude oil, copper and other commodities' prices also rallied, while government debt slumped on the data.
"The employment number was definitely the trigger for today's rally," said Michael Korn, president at Skokie Energy in Princeton, New Jersey.
The Dow Jones industrial average was up 134.81 points, or 0.91 percent, at 14,966.39. The Standard & Poor's 500 Index was up 16.01 points, or 1.00 percent, at 1,613.60. The Nasdaq Composite Index was up 34.74 points, or 1.04 percent, at 3,375.37.
In Europe, the FTSEurofirst 300 of leading shares rose 1.13 percent to 1,220.16, while MSCI's all-country world equity index rose 0.83 percent to 371.0.
The dollar rose 1.2 percent to 99.15 yen, on pace for its biggest one-day rise in two weeks, while the euro rebounded a day after President Mario Draghi of the European Central Bank said it was technically ready for negative deposit rates.
The euro was up 0.44 percent to 1.3121.
German Bund futures fell to a session low of 146.20, down 96 ticks on the day.
The benchmark 10-year U.S. Treasury note was down 25/32 in price to yield 1.709 percent.
Brent crude was up $1.02 at $103.87 a barrel, while U.S. crude gained 93 cents to $94.92 a barrel.
"The idea that the employment is holding as well as it is in the face of the fiscal headwinds the economy is currently enduring is a very positive sign of the economy's underlying fundamental improvements," said Russell Price, a senior economist at Ameriprise Financial Services.
The better jobs data comes just a month after the Bank of Japan promised to inject about $1.4 trillion into its economy to spur growth and end decades of deflation.