U.S. dollar and bond yields lower, stocks up after jobs report

By Dion Rabouin

NEW YORK (Reuters) - Key world stock indexes rose on Friday, with U.S. equities near record highs, amid data showing the creation of more U.S. jobs than expected, while President Donald Trump's executive order to review banking regulations boosted financial sector shares.

Still, the U.S. dollar headed for its fourth straight weekly loss and bond yields slipped after wage growth slowed in the monthly U.S. employment report, suggesting the Federal Reserve may not raise interest rates again soon.

U.S. non-farm payrolls increased by 227,000 jobs last month, the largest gain in four months, but wages increased only modestly, suggesting there was still some slack in the labour market.

"Continued strong job creation is tempered by the renewed sluggishness in wage growth, raising questions once again about the extent to which the functioning of the labour market has evolved," said Mohamed El-Erian, chief economic adviser at Allianz in Newport Beach, California.

The Dow Jones Industrial Average rose 167 points, or 0.84 percent, to 20,051.91, the S&P 500 gained 14.59 points, or 0.64 percent, to 2,295.44 and the Nasdaq Composite added 19.32 points, or 0.34 percent, to 5,655.52.

MSCI's all-world stock index , which tracks bourses in 46 markets, rose 0.45 percent, on pace for its third day of gains.

U.S. Treasury yields fell on the disappointing wage growth numbers, indicating inflation may not rise at a pace that would lead the Federal Reserve to raise rates soon.

Benchmark 10-year Treasury prices rose 2/32 to yield 2.47 percent and the lower yields undermined the dollar , which had risen in early trading on expectations of a solid reading.

The U.S. dollar has been hit in recent weeks by uncertainty about policy direction amid a flurry of executive orders by Trump, after an initial burst of enthusiasm spurred by the new administration's promises of tax reform, infrastructure spending and financial deregulation.

Trump is expected to order a review of the Dodd-Frank Act on Friday, which was implemented in the aftermath of the 2008 financial crisis to prevent a repeat of the worst financial crash since the Great Depression.

Sterling steadied after its worst fall since October. The euro , which was set for its sixth week of gains in seven, was at $1.0765, having climbed as high as $1.0829 after the latest signs that growth and inflation are rising in the euro zone.

European stocks gained broadly with the STOXX 600 <.STOXX> rising 0.6 percent, rebounding from losses in the previous session. The index was negative for the week as caution about the impact of Trump's policies weighed on a rally in risky assets.

Euro zone corporate earnings have been strong so far and a survey on Friday showed euro zone businesses started 2017 by increasing activity at the same multi-year record pace they set in December, and faster growth in demand suggested the good times will continue.

Oil prices rose after U.S. threats of new sanctions against Iran. Comments by Russian Energy Minister Alexander Novak that oil producers have cut their output in accordance with a pact agreed in December also helped to support prices.

Crude futures were up 0.2 percent with Brent crude set to gain more than 2 percent for the week.

London copper was down 2 percent on the day, hitting its lowest in two weeks. The decline came after workers restarted wage talks at the largest copper mine in Chile and China increased its interest rates, sparking concern about a clampdown on speculators.

(Additional reporting by Vikram Subhedar in London and Danilo Masoni in Milan; Editing by Clive McKeef and Bernadette Baum)