* Dow and S&P 500 hit record highs * Brent rises above $104 * U.S. unemployment falls to 4-year low * Government debt slumps on strong U.S. jobs report By Herbert Lash NEW YORK, May 3 (Reuters) - The U.S. dollar surged against the yen and global equity markets rallied on Friday after the U.S. government reported jobs growth for April that topped expectations, driving stocks on Wall Street to record highs. U.S. nonfarm payrolls rose by 165,000 last month and the jobless rate fell to a four-year low of 7.5 percent, the Labor Department said. Hiring was also much stronger than previously thought in the prior two months, signs of a resilient jobs market. Economists expected payrolls to rise by 145,000 and the unemployment rate to hold steady at 7.6 percent. Leading U.S. and European indexes advanced more than 1 percent in a rally that has boosted the benchmark S&P 500 index more than 5 percentage points from April lows in just 11 sessions. Both the S&P 500 index and the Dow industrials topped key milestones for the first time, with the S&P 500 breaking through the 1,600 mark and the Dow surpassing 15,000. In a sign of the rally's breadth, the Russell 2000 index of mid- and small-cap stocks also hit an all-time high. Prices of crude oil, copper and other commodities also rallied as the jobs data raised investor confidence that demand is growing. Copper, a key industrial metal, surged more than 6 percent. Prices of government debt, a traditional safe haven, 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 strong jobs data overshadowed an industry report that showed the pace of growth in the vast U.S. services sector slowed in April to its weakest pace in nine months. The Dow Jones industrial average was up 140.83 points, or 0.95 percent, at 14,972.41. The Standard & Poor's 500 Index was up 16.54 points, or 1.04 percent, at 1,614.13. The Nasdaq Composite Index was up 37.99 points, or 1.14 percent, at 3,378.61. In Europe, the FTSEurofirst 300 of leading shares rose 1 percent to 1,218.60, the highest close since June 2008. MSCI's all-country world equity index rose 0.81 percent to 370.90. The dollar rose 1.15 percent against the yen, to 99.08 yen , on pace for its biggest one-day rise in two weeks, while the euro rebounded a day after the European Central Bank's president, Mario Draghi, said the ECB was technically ready for negative deposit rates. The euro was up 0.34 percent to $1.3107. German Bund futures settled down 101 ticks at 146.15, while the benchmark 10-year U.S. Treasury note was down 1 3/32 in price to yield 1.7417 percent. Brent crude settled $1.34 higher at $104.19 a barrel, while U.S. crude gained $1.62 to settle at $95.61 a barrel. Benchmark copper on the London Metal Exchange closed at $7,265 per tonne, up from a close of $6,848 on Thursday. It rose more than 6 percent, its biggest daily rise since late October 2011, to hit an intraday high of $7,289 per tonne. Gold traded flat, erasing early gains after faster-than-expected U.S. job growth, which reduced the need for the Federal Reserve to immediately boost monetary stimulus. "The idea that 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 the Japanese economy to spur growth and end decades of deflation. By increasing liquidity, three of the world's major central banks have fueled a rally in share and bond markets that has driven many benchmark indexes back up to levels last seen before the financial crisis began.