Global shares extend gains after U.S. jobs report, bonds rise

By Herbert Lash

LONDON (Reuters) - Global equity markets rose and bond yields fell on Friday after a solid U.S. jobs report showed a recovering economy and added to an already buoyant market lifted by the European Central Bank's pledge to douse potential deflation with bundles of cash.

U.S. equity futures rose and European stock indexes extended gains after the nonfarm payrolls report showed U.S. employers maintained a solid pace of hiring in May, returning employment to its pre-recession level.

The U.S. 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, the Labor Department said.

"This number is not a surprise and should be a rallying cry for the bulls. 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," said Todd Schoenberger, managing partner at Landcolt Capital in New York.

The FTSEurofirst 300 index of top European shares extended gains, rising 0.43 percent to 1,380.21 points.

U.S. stock index futures pointed to a higher open. S&P 500 futures SPc1 rose 4 points, or 0.21 percent. Dow Jones industrial average futures added 50 points and Nasdaq 100 futures rose 13.75 points.

U.S. Treasuries prices gained and German bund futures hit session highs of 145.99 after the U.S. jobs data, up 98 ticks on the day.

Benchmark 10-year notes were last up 9/32 in price to yield 2.5518 percent.

The euro gyrated in a narrow range, trading flat to slightly lower versus the U.S. dollar. The euro was last down 0.05 percent at $1.3651.

Brent rose 19 cents to $108.98 a barrel. U.S. crude was at $102.92 a barrel, up 44 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 it out in the future, saying, "We aren't finished here."

(Reporting by Herbert Lash; Editing by Meredith Mazzilli)