Strong U.S. jobs data boosts dollar and world stocks

By Herbert Lash

NEW YORK (Reuters) - The dollar climbed to a more than four-year peak and global equity markets surged on Friday after data showed U.S. employers stepped up hiring in September and the jobless rate fell to a six-year low, further signs of a relatively strong economy.

The strong dollar pushed gold below $1,200 an ounce for the first time this year after the Labor Department reported that U.S. nonfarm payrolls rose by 248,000 last month and the jobless rate fell two-tenths of a point to 5.9 percent.

The better-than-expected report knocked the euro to a more than two-year low against the dollar, which hit a 15-month high against the Swiss franc. The dollar index, a measure of the greenback against six major currencies, headed toward its biggest yearly gain in nine years, up 8 percent so far in 2014.

Stocks on Wall Street rose more than 1 percent, and European shares finished with a gain just under that level.

"Overall it's a positive report for the dollar and points to continued growth and recovery in the U.S.," said Sireen Haraji, currency strategist at Mizuho Corporate Bank in New York.

Traders boosted bets the Federal Reserve could hike interest rates slightly earlier next year than anticipated. Rate futures contracts show traders are betting that the first Fed rate hike will come next July, based on CME FedWatch, which tracks rate hike expectations using its fed funds futures contracts.

The dollar index hit a high of 86.746, its strongest level since June 2010, and was last up 1.24 percent at 86.663.

Against the yen, the greenback jumped 1.31 percent to 109.83 yen, while the euro slid 1.23 percent to $1.2512.

MSCI's all-country world index of stock performance in 45 countries rose 0.51 percent.

The FTSEurofirst 300 index of top European shares closed up 0.9 percent at 1,347.14. Shares of European airlines rallied as the price of oil dropped, and exporters such as Airbus got a lift from the euro's renewed slide.

On Wall Street, the Dow Jones industrial average rose 214.3 points, or 1.28 percent, to 17,015.35. The S&P 500 gained 23.56 points, or 1.21 percent, to 1,969.73 and the Nasdaq Composite added 54.83 points, or 1.24 percent, to 4,485.03.

Healthcare and financial names led the gains on Wall Street.

German Bund yields rose a day after the European Central Bank showed little willingness to stimulate the economy through the purchase of sovereign debt. Markets could be in for a rough fourth quarter as investors anticipate tighter Fed monetary policy and if the ECB stands pat.

Bund yields rose 2 basis points to 0.93 percent. Treasuries prices fell. The 10-year Treasury note fell 3/32 in price to yield 2.4466 percent.

Brent crude oil futures fell below $92 a barrel at one point, down for a fourth consecutive day in a slide that has pushed prices to their lowest levels since 2012. Abundant supplies and a strong dollar continue to weigh on the market.

Brent for November delivery settled down $1.11 at $92.31 a barrel. U.S. November crude slipped $1.27 to settle at $89.74.

(Reporting by Herbert Lash; Editing by James Dalgleish, Leslie Adler and Chizu Nomiyama)