* Investors shrug off disappointing jobs report, citing weather impact
* Unemployment rate falls to five-year low of 6.6 percent
* Bond prices rise on the jobs report, economic softness feared
By Herbert Lash
NEW YORK, Feb 7 (Reuters) - Global equity markets rallied on Friday as investors pegged a poor U.S. jobs report on bad weather, but bond yields and the dollar fell as the data showed employers hired far fewer workers than expected in January, suggesting economic softness.
Non-farm payrolls rose by 113,000, well below the consensus of 185,000, although the unemployment rate hit a five-year low of 6.6 percent, the U.S. Labor Department said.
The dollar fell broadly while safe-haven gold and U.S. government debt prices rose on the unemployment report. But the equity market also rose, with investors writing off the weakest two months of U.S. job growth in three years on inclement weather.
“Markets are increasingly behaving as though the recent series of soft economic data is truly attributable to bad weather, and not some broader downturn in demand,” said David Joy, chief market strategist at Ameriprise Financial in Boston.
“It’s unlikely that the economic momentum from late last year simply stalled in December and January,” Joy said.
MSCI’s all-country stock index rose 0.56 percent, and its gauge of emerging markets rose 0.69 percent.
The pan-European FTSEurofirst 300 index of leading shares rose 0.55 percent, helped by steelmaker Arcelor , as investors bet equities would continue to benefit from the region’s gradual economic rebound.
On Wall Street, the Dow Jones industrial average rose 8.45 points, or 0.05 percent, to 15,636.98. The S&P 500 gained 4.86 points, or 0.27 percent, to 1,778.29 and the Nasdaq Composite added 15.465 points, or 0.38 percent, to 4,072.587.
“Expectations for the report were too high, and investors are giving the report the benefit of the doubt because of the weather,” said Donald Selkin, chief market strategist at National Securities in New York.
After the sell-off earlier in the week, the fact equities are rising after Thursday’s gains shows there’s still momentum to the bull market, Selkin said.
“Stocks initially got killed after the report came out, but now we’re pretty sharply higher. That’s a strong sign that we’ve bottomed out,” he said.
Though the labor market report called into question the strength of the economy, the preponderance of most economic data still shows some pretty good growth, said Anthony Valeri, investment strategist at LPL Financial in San Diego.
“We’re seeing earnings on track to grow about 9 percent year-over-year, and as long as that’s the case, the pullback in stocks is likely to be limited,” Valeri said.
“The data hasn’t been weak enough to suggest that the current earnings trajectory will deviate,” he said.
The dollar index fell 0.19 percent to 80.754, as the euro gained 0.16 percent to 1.3610 against the greenback. The dollar rose 0.12 percent to 102.20 against the yen.
The benchmark 10-year U.S. Treasury note rose 9/32 in price, pushing its yield down to 2.6656 percent.
Brent crude rose toward $108 a barrel after a fall in the U.S jobless rate to a five-year low of 6.6 percent fueled hopes for stronger demand in the world’s top oil consumer.
Brent crude oil futures were up 81 cents at $108.00 a barrel. U.S. crude was up 28 cents at $98.12 a barrel.