* 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 and closing record highs, while European
shares and a gauge of global equity markets rose to their
highest levels in more than 4-1/2 years.
U.S. equities ended the session in a surge that put the
benchmark S&P 500 index less than 1 percent away from a record
closing high. Advancing stocks outnumbered declines by more than
2 to 1 on both the New York Stock Exchange and Nasdaq.
The Dow is up almost 10 percent so far this year, while the
S&P has gained almost 9 percent.
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 added 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.
Adding to the stream of encouraging data was a 1.2 percent
gain in U.S. wholesale inventories in January to $504.4 billion
- the fastest pace of growth since December 2011. The strong
reading followed a revised 0.1 percent rise in December 2012.
JPMorgan Chase, Bank of America and Goldman
Sachs & Co weighed on the rally, as banks had advanced
recently ahead of the Federal Reserve's stress test results that
showed they had enough capital to withstand a severe downturn.
Despite the strong market reaction, last month's labor
report showed a job 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,
referring to the Fed's asset-buying program.
The Dow Jones industrial average closed up 67.58
points, or 0.47 percent, at 14,397.07. The Standard & Poor's 500
Index rose 6.92 points, or 0.45 percent, at 1,551.18. The
Nasdaq Composite Index added 12.28 points, or 0.38
percent, at 3,244.37.
For the week, the Dow and S&P both rose 2.2 percent, while
the Nasdaq gained 2.4 percent.
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 0.35 percent at 360.18.
U.S. Treasuries 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
Prices for benchmark 10-year notes dropped 18/32
to yield 2.05558 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 0.8 percent to $1.2998, 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 96.08 yen, up
1.34 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.