NEW YORK (Reuters) - Global equity markets and the dollar rose on Friday, with U.S. stocks closing at record highs, after data on U.S. jobs creation bolstered risk appetite that was also fed by the European Central Bank's pledge to douse deflation with bundles of cash.
The Dow and S&P 500 advanced in a broad rally that has spurred repeated records since last week. The CBOE Volatility index VIX, a measure of investor apprehension, tumbled 8.3 percent to its lowest level since February 2007.
In Europe, peripheral markets outperformed as investors bet that banks in the euro zone would benefit the most from the ECB's measures announced on Thursday.
The U.S. nonfarm payrolls report showed a solid pace of hiring in May, returning employment to its pre-crisis level. The economy has recouped the 8.7 million jobs lost during the recession after adding just under 217,000 jobs in May. The unemployment rate held steady at 6.3 percent.
The report was within expectations, but "the main thing is that the world's biggest economy is moving in the right direction and slowly gathering momentum," said Marcus Bullus, trading director of MB Capital.
Markets also were buoyed after the ECB cut interest rates, including taking deposit rates for banks below zero, and pledged hundreds of billions more euros in cheap funds for banks.
MSCI's all-country stock index rose 0.58 percent. The FTSEurofirst 300 index of top European shares rose 0.6 percent to close at 1,388.48.
The Dow Jones industrial average closed up 88.17 points, or 0.52 percent, to 16,924.28. The S&P 500 gained 8.98 points, or 0.46 percent, to 1,949.44, and the Nasdaq Composite added 25.172 points, or 0.59 percent, to 4,321.399.
For the week, the Dow rose 1.2 percent, the S&P gained 1.3 percent and the Nasdaq 1.9 percent.
Benchmark 10-year Treasuries retreated, falling 3/32 in price to yield 2.5950 percent.
The U.S. dollar rebounded as investors added to a well-worn pattern of borrowing greenbacks to buy higher-yielding currencies after the U.S. jobs data left few chances the Federal Reserve will deviate from its course of removing monetary accommodation from a strengthening economy.
The euro gyrated after the data, initially selling off but then rising briefly to a two-week high of $1.3677. It settled back to $1.3641, down 0.12 percent.
U.S. crude oil futures rose as the U.S. jobs report bodes well for future oil demand.
Brent fell 18 cents to $108.61 a barrel. U.S. crude rose 18 cents to settle at $102.66 a barrel.
Reporting by Herbert Lash; Editing by Meredith Mazzilli, Dan Grebler and Leslie Adler