U.S. stocks jump, dollar gains after U.S. jobs report

By David Gaffen and Herbert Lash

NEW YORK (Reuters) - Stocks on Wall Street jumped on Friday after strong jobs data made it almost certain the Federal Reserve would raise interest rates in two weeks, while a surprise move by major oil exporters to keep pumping near-record volumes pushed crude prices down.

The dollar rose, gold rallied about 2 percent and base metals, including copper, gained after the U.S. jobs report for November paved the way for the Fed to raise rates at an impending two-day meeting for the first time in nearly a decade.

The U.S. economy created 211,000 jobs in November, the U.S. Labor Department said. September and October data was revised to show 35,000 more jobs than previously reported.

"The numbers did not disappoint. We cleared the last hurdle for a rate increase," Chris Gaffney, president of Everbank World Markets in St. Louis.

U.S. stocks rallied, with the Dow industrials rising 2 percent and the S&P 500 and Nasdaq almost as much. MSCI's all-country world stock index gained 0.65 percent.

The Dow Jones industrial average rose 355.87 points, or 2.04 percent, to 17,833.54. The S&P 500 gained 38.5 points, or 1.88 percent, to 2,088.12 and the Nasdaq Composite added 94.36 points, or 1.87 percent, to 5,131.89.

Small tweaks to the European Central Bank's stimulus package on Thursday, which sent markets into a tailspin, will also make it easier for the Fed to raise rates as the euro strengthened and the dollar weakened, said Omar Aguilar, chief investment officer of equities at Charles Schwab Investment Management.

The weaker dollar will have less of an impact on U.S. corporate earnings, and should bolster equity markets, he said.

"I can see from now until the end of the year moderate gains, growing into a nice steady pace," Aquilar said.

OIL SHARES DROP

European shares ended lower, with oil stocks <.SXEP> falling almost 2 percent. Members of the Organization of the Petroleum Exporting Countries failed to agree an oil production ceiling during a meeting in Vienna.

The pan-European FTSEurofirst 300 index fell 0.34 percent to their lowest level in almost three weeks.

Brent crude oil futures fell 55 cents to $43.29 a barrel. U.S. crude futures dropped $1.04 to $40.04 a barrel, after briefly dropping below $40.

The dollar was last up 0.47 percent at 123.17 yen, while the euro was slid 0.69 percent against the dollar to $1.0863. The dollar index , which measures the greenback against a basket of six major rivals, was last up 0.82 percent at 98.422 .

The gap between 10-year U.S. and German bond yields narrowed to its tightest in more than a month on Friday as investors bet that a divergence in monetary policy between the Fed and the ECB may be less stark than previously though.

The euro on Thursday saw its biggest one-day move in more than six years in a dramatic reversal of its recent rally after ECB President Mario Draghi surprised investors with less monetary stimulus than markets expected.

Benchmark 10-year Treasury notes were last up 19/32 in price to yield 2.2623 percent.

Yields on German 10-year yields climbed 6 basis points on Friday, rising above 0.70 percent for the first time in 2-1/2-months .

(Additional reporting by Jamie McGeever; Editing by Nick Zieminski and Bernadette Baum)