By Herbert Lash
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 bolstered a market already lifted by the European Central Bank's pledge to douse 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."
Markets also 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 in cheap funds for banks.
MSCI's all-country stock index rose 0.53 percent. The FTSEurofirst 300 index of top European shares rose 0.6 percent to close at 1,388.48.
The Dow Jones industrial average rose 72.55 points, or 0.43 percent, at 16,908.66. The Standard & Poor's 500 Index was up 7.22 points, or 0.37 percent, at 1,947.68. The Nasdaq Composite Index was up 21.23 points, or 0.49 percent, at 4,317.45.
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 retreated, down 4/32 in price to yield 2.5986 percent.
The U.S. dollar recouped losses as investors added to a well-worn pattern of borrowing greenbacks to buy higher-yielding currencies after the solid U.S. jobs data left few chances the Federal Reserve would speed up monetary tightening.
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 $1.3638, down 0.15 percent.
U.S. crude oil futures rose as the U.S. jobs report bodes well for future oil demand.
Brent LCOc1 fell 18 cents to $108.61 a barrel. U.S. crude CLc1 rose 18 cents to settle at $102.66 a barrel.
(Reporting by Herbert Lash; Editing by Meredith Mazzilli, Leslie Adler and Dan Grebler)
