By Herbert Lash
NEW YORK (Reuters) - The dollar rose and global equity markets jumped on Friday after data showed U.S. job growth increased by the most in 10 months in November, putting to rest recession fears and briefly taking the spotlight off contentious U.S.-China trade talks.
U.S. Treasury yields rose, while gold slipped more than 1%, reflecting a rebound in investor appetite for risk as U.S. unemployment dipped to 3.5%, the lowest in nearly half a century.
Stocks on Wall Street neared record highs, with the benchmark S&P 500 closing within 0.24% of its peak set nine days ago. MSCI's all-country world index, a global benchmark, closed less than 3 points shy of its all-time high of 550.63.
The stronger-than-expected U.S. Labor Department data showed steady wage gains remained near their strongest in a decade, suggesting consumers will continue to drive the longest economic expansion in U.S. history, now in its 11th year.
The improving data would appear to validate the U.S. Federal Reserve's decision in October to signal, after three interest rate cuts this year, that no more are needed for now.
"This certainly contributes to the idea that the U.S. economy is doing better than most folks would give it credit for," said Michael Arone, chief investment strategist at State Street Global Advisors in Boston.
"This was a very solid report and should put those fears of recession firmly in the rear view," he said.
MSCI's gauge of stocks across the globe gained 0.76%, closing at 548.12. The week ended on a positive note after stocks swung wildly on conflicting remarks regarding progress in U.S.-China trade negotiations.
European equities rallied, with the pan-regional STOXX 600 index rising 1.16%. Most major regional indices closed more than 1% higher.
Shares on Wall Street rose as the jobs report bolstered the consensus view that consumer strength will support the U.S. economy and in turn, equities.
The Dow Jones Industrial Average rose 337.27 points, or 1.22%, to 28,015.06. The S&P 500 gained 28.48 points, or 0.91%, to 3,145.91 and the Nasdaq Composite added 85.83 points, or 1%, to 8,656.53.
The dollar gained after weaker-than-expected U.S. data on manufacturing and the service sector earlier in the week helped drive five straight days of losses.
The dollar index rose 0.29%, with the euro down 0.41% to $1.1056. The Japanese yen strengthened 0.18% versus the greenback at 108.57 per dollar.
Analysts said the jobs report showed underlying U.S. economic strength and offset mixed signals from other recent data.
"This is going to throw a wrench into the argument that the economy is slowing down," said Andre Bakhos, managing director at New Vines Capital LLC in Bernardsville, New Jersey.
"Companies don't hire if the economy is slowing down. Companies go the other way," he said.
The unemployment report provided a respite from persistent pessimism on the economy and nagging doubts about the prolonged U.S.-China trade war, which faces a looming hurdle with a new round of U.S. tariffs scheduled to take effect on Dec. 15.
Most economic data will continue to take a back seat to the U.S.-China trade negotiations, which will remain the driver of market action for most of December, Arone said.
Top White House economic adviser Larry Kudlow said the Dec. 15 deadline is still in place but President Donald Trump likes where trade talks with China are going.
China said on Friday it would waive import tariffs for some soybeans and pork shipments from the United States.
The gesture aimed at concluding a "phase one" or interim deal to de-escalate the 17-month trade war that has roiled financial markets, disrupted supply chains and weighed on global economic growth.
China stocks posted their biggest weekly advance in nearly two months, with blue chips up 0.6%.
Benchmark 10-year U.S. Treasury notes fell 13/32 in price to yield 1.8398%.
Germany's 10-year Bund yield rose to -0.273% before paring some gains to trade at -0.291% - basically flat for the day.
Oil prices rose sharply after the Organization of the Petroleum Exporting Countries and its allies agreed to extend output cuts by 500,000 barrels per day in early 2020.
Brent futures settled up $1.00 at $64.39 a barrel, while West Texas Intermediate oil futures rose 77 cents to settle at $59.20 a barrel.
U.S. gold futures settled down 1.2% at $1,465.10 an ounce.
(Reporting by Herbert Lash, additional reporting by Arjun Panchadar in Bengaluru; Editing by Dan Grebler and Richard Chang)