* Wall Street gains on better-than-expected February
* European shares rise further, MSCI world index hits
* Dollar touches 3-1/2-year peak against yen
* U.S. Treasury yields jump as jobs report suggests
By Herbert Lash
NEW YORK, March 8 World equity markets rallied
and the U.S. dollar strengthened on Friday after an unexpectedly
sharp jump in U.S. employment in February reinforced the view
that the world's biggest economy is gaining traction.
The Dow Jones industrial average posted its fourth
consecutive intraday record high, while European shares and a
gauge of global equity markets rose to their highest levels in
more than 4-1/2 years.
The dollar touched a 3-1/2-year high against the yen and a
three-month peak against the euro, but U.S. Treasuries sank on
the payrolls report, which showed the U.S. unemployment rate
fell to a four-year low of 7.7 percent last month.
Nonfarm payrolls surged by 236,000 jobs in February, the
Labor Department said, handily beating economists' expectations
of a gain of 160,000.
"We're seeing growing inflows coming into the asset class.
This is sort of a sweet spot, with improving U.S. job data while
central banks around the world are pledging to keep printing
money," said David Thebault, head of quantitative sales trading
at Global Equities in Paris.
U.S. stocks pared some early gains, led by declines in
JPMorgan Chase, Bank of America and Goldman
Sachs & Co. 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. The length of time people are unemployed deteriorated, the
number of discouraged workers increased, voluntary job labor
fell and the labor force participation rate declined, all items
Fed policymakers pay close attention to, she said.
"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 60.71 points,
or 0.42 percent, at 14,390.20. The Standard & Poor's 500 Index
was up 7.03 points, or 0.46 percent, at 1,551.29. The
Nasdaq Composite Index was up 12.82 points, or 0.40
percent, at 3,244.91.
The broad rally prompted some investors to seek out areas of
relative value in southern Europe, which had been hit anew
recently over resurgent political risk in the region.
Italy's FTSE MIB benchmark index and Spain's IBEX
chalked up the biggest gains among major European
indices, surging 1.6 percent and 2.9 percent, respectively.
The FTSEurofirst 300 index of top European shares
closed 0.85 percent higher at 1,195.20.
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. The MSCI index was up 0.37 percent at 360.24.
U.S. Treasuries pared some 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
to yield 2.0576 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 0.76 percent to $1.3004, extending losses
against the dollar after Fitch cut the credit rating of Italy's
sovereign debt following recent elections.
Against the yen the dollar climbed as high as 96.54
yen, the highest since August 2009. It was last at 95.87 yen, up
1.1 percent in its biggest one-day gain since Feb. 11.
Brent crude futures fell as the U.S. jobs data strengthened
Brent futures settled down 30 cents at $110.85 a
barrel. Brent closed out the week higher, breaking three
straight weeks of decline.
U.S. oil rose 39 cents to settle at $91.95.