Global stocks edged higher and the U.S. dollar gained against the euro and yen on Friday after the pace of U.S. job losses slowed sharply in May, adding to growing sentiment that the economic slowdown may be turning.
Equity and oil markets initially rose on the much better-than-expected U.S. employment data. But after climbing to more than $70 a barrel, crude prices see-sawed around break-even as stocks traded slightly higher.
While U.S. employers cut 345,000 jobs last month -- the fewest since September and far less than economists had forecast -- unemployment hit its highest rate in nearly 26 years, a reminder that the economy is far from recovery.
The unemployment numbers were great in that there were fewer people losing their jobs, but the rate of unemployment rose more than expected, said Phil Flynn, an analyst at Alaron Trading in Chicago.
That is disappointing for the market as it raises worries about the long-term prospects in the job market, he said.
U.S. and euro zone government bonds sank on the surprise drop in nonfarm payrolls and gold futures dropped more than 2 percent in heavy trading. Longer-dated euro zone debt tumbled to the lowest level in nearly seven months
A sharply rebounding dollar weighed on commodity prices such as copper. A strong U.S. currency makes metals priced in dollars more expensive for holders of other currencies.
That has taken the shine off commodities, said Robin Bhar, senior metals analyst at Calyon. I suspect as the day wears on, people will ask whether (the data) really was that good.
A $15 billion stock buyback announced by Wal-Mart Stores Inc
The sentiment implications are significant, said Michael James, a senior trader at regional investment bank Wedbush Morgan in Los Angeles.
For one of the country's biggest companies to be announcing a buyback of that magnitude I think is a significant, positive expression about the strength of their business and it sends a positive message to the market, James said.
Shortly after 1:30 p.m., the Dow <.DJI> was up 46.86 points, or 0.54 percent, to 8,797.10. The Standard & Poor's 500 Index <.SPX> edged up 0.90 point, or 0.10 percent, to 943.36. The Nasdaq Composite Index <.IXIC> gained 1.84 points, or 0.10 percent, to 1,851.86.
European shares rose, led by miners, banks and oil producers, as U.S. jobless data boosted sentiment.
The FTSEurofirst 300 <.FTEU3> index of top European companies closed up 0.7 percent at 872.29 points, for a weekly gain of about 1.2 percent.
The dollar's rise surprised some in the market because strong economic data has generally been seen as a boost to risk, leading the greenback to fall.
The view here is that these better-than expected jobs numbers should enable the United States to come out of recession first, leading to a stronger dollar overall, said Brian Dolan, chief currency strategist at Forex.com in Bedminster, New Jersey.
U.S. light sweet crude oil rose 43 cents to $69.24 a barrel.
Spot gold prices fell $15.10 to $964.00 an ounce.
U.S. Treasury debt prices were lower. The benchmark 10-year U.S. Treasury note fell 33/32 in price to yield 3.85 percent, while the 2-year U.S. Treasury note lost 18/32 in price to yield 1.24 percent.
The dollar rose against a basket of major currencies, with the U.S. Dollar Index <.DXY> up 1.13 percent at 80.366.
The euro fell 1.19 percent at $1.4018, while against the yen, the dollar was up 1.67 percent at 98.18.
Asian shares rose overnight, trading off positive signals seen in Thursday's weekly U.S. jobless claims data. The MSCI index of Asia-Pacific stocks outside Japan <.MIAPJ0000PUS> rose 0.8 percent.
(Reporting by Chuck Mikolajczak, Nick Olivari and Chris Reese in New York; Dominic Lau, Christopher Johnson and Kirsten Donovan in London; writing by Herbert Lash; Editing by Dan Grebler)