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dateline, previous LONDON)
* Payrolls 288,000 vs forecast 210,000, unemployment 6.3 pct
vs forecast 6.6 pct
* Dollar up, Wall Street higher
* Short-dated Treasuries sell on Fed worries
* Russia, Ukraine crisis keeps caution high
By David Gaffen
NEW YORK, May 2 Early stocks gains on Wall
Street faded and investors retreated to long-dated government
debt on Friday, as enthusiasm over strong headline U.S. jobs
growth was undercut by flat wages and a decline in the number of
people looking for work.
Traders also cited headlines on more violence in eastern
Ukraine as sparking a shift into the bond market.
The U.S. economy added 288,000 jobs in April, more than
expected. Strong as the headline figure was, the report raised
some concerns as more than 800,000 people left the U.S. labor
force and average hourly wages were unchanged in April.
"The market perceives the unemployment numbers as good on
quantity, but bad on quality," said Guy Lebas, chief fixed
income strategist at Janney Montgomery Scott in Philadelphia.
Selling in U.S. Treasuries was modest in short- and
medium-dated notes as investors responded to the increased
likelihood of interest-rate hikes from the Fed. However,
long-dated bond yields fell, which reflects a view that the
economy is still not strong enough to spark inflation.
The five-year Treasury note was down 2/32 to yield 1.677
percent, while the 30-year bond, after an earlier selloff,
turned around to rise 16/32 to lower its yield to 3.389 percent.
The jobs figures bumped up the odds on the Federal Reserve
raising rates sooner in 2015, with the expectations for a rate
increase by June 2015 increasing to about 56 percent from 47
percent a day earlier.
U.S. stocks slipped after an early rally. The S&P 500 began
the day not far from its all-time closing high of 1890.90
reached on April 2 but traded mostly flat on Friday.
"On the face of it, these numbers are definitely good and a
confirmation that all the weather-related distortions are a
thing of the past," said Ian Gunner, portfolio manager at Altana
Hard Currency Fund.
"But I would wait for another month of solid job gains to
see if this is really a one-off or a trend."
Pro-Russian rebels shot down two Ukrainian helicopters on
Friday, killing two crew members, while Moscow accused Kiev of
wrecking hopes of peace by launching a "criminal" assault to
retake the separatist-held town of Slaviansk.
The Dow Jones industrial average fell 10.46 points or
0.06 percent, to 16,548.41, the S&P 500 gained 0.63
points or 0.03 percent, to 1,884.31 and the Nasdaq Composite
added 1.014 points or 0.02 percent, to 4,128.465.
In the currency market, the dollar edged lower
against the yen and was flat against the euro,
giving up earlier gains.
Global markets were flat. The MSCI All-World Index
rose 0.1 percent while the FTSEurofirst 300
slipped 0.2 percent.
The job gains were felt in Canada as well, where the TSX
, Canada's main stock index, rose to its highest in
almost six years.
Among commodities, oil remained top-heavy after Thursday's
slip following disappointing Chinese economic data and a survey
showing U.S. crude stocks rose last week to their highest level
since 1982. U.S. crude futures gained 35 cents to $99.78
a barrel while Brent crude rose 66 cents to $108.42.
Gold rose by $10.61 to $1,294.10, while copper,
whose industrial uses make it sensitive to growth
expectations, gained 0.9 percent.
(Additional reporting by Marc Jones in London; Editing by
Catherine Evans and Meredith Mazzilli)