By Jamie McGeever
LONDON (Reuters) - Global equity markets rose and bond yields fell on Friday after a solid U.S. jobs report added to evidence of a recovering economy and strengthened a market already lifted by the European Central Bank's pledge to douse potential deflation with bundles of cash.
The Dow and S&P 500 extended a rally that has taken them to repeated records since last week, while in Europe peripheral markets outperformed as investors bet that banks in the euro zone would benefit the most from the ECB's measures.
The nonfarm payrolls report showed U.S. employers maintained 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, adding just under 217,000 jobs in May, while the unemployment rate held steady at 6.3 percent.
"This number is not a surprise and should be a rallying cry for the bulls," said Todd Schoenberger, managing partner at Landcolt Capital in New York. "There's no shock on either side of the tape, but it supports the historical norm of the second quarter typically being the best of the year."
MSCI's all-country stock index rose 0.53 percent. The FTSEurofirst 300 .FTEU3 index of top European shares gained the same, closing at a preliminary 1,387.54 points.
The Dow Jones industrial average .DJI rose 67.35 points, or 0.4 percent, to 16,903.46. The S&P 500 .SPX gained 7.78 points, or 0.4 percent, to 1,948.24, and the Nasdaq Composite .IXIC added 22.263 points, or 0.52 percent, to 4,318.49.
U.S. Treasuries prices gained and German bund futures FGBLc1 hit session highs of 145.99 after the U.S. jobs data, up 98 ticks on the day.
Benchmark 10-year Treasuries US10YT=RR were last up 1/32 in price to yield 2.5806 percent.
Investors trimmed U.S. dollar holdings after the jobs report nearly matched consensus and left few chances the U.S. Federal Reserve will deviate from its course of removing monetary accommodation from a strengthening economy.
The euro EUR= gyrated after the data, initially selling off but then rising briefly to a two-week high of $1.3677. It settled back to $1.3637, down 0.15 percent.
Brent LCOc1 fell 26 cents to $108.53 a barrel. U.S. crude CLc1 was at $102.40 a barrel, down 8 cents.
Markets were buoyed after the ECB on Thursday cut interest rates, including taking deposit rates for banks below zero, and pledged hundreds of billions more euros of cheap funds for banks.
The ECB refrained from following the U.S., Japanese and British central banks in pursuing outright bond-buying. But its president, Mario Draghi, did not rule such bond purchases in the future, saying, "We aren't finished here."
(Reporting by Herbert Lash; Editing by Meredith Mazzilli and Leslie Adler)
