By Herbert Lash
NEW YORK (Reuters) - The dollar rose and global equity markets advanced on Friday after U.S. jobs data for May suggested the economy is improving but not enough to persuade the Federal Reserve to start easing back on its monetary stimulus, a good scenario for investors.
Employment outside the farming sector in the world's leading economy rose by 175,000 last month, just above the median forecast in a Reuters poll, Labor Department data showed.
The unemployment rate ticked one-tenth of a percentage point higher to 7.6 percent, a relatively hopeful sign as it was driven by more workers entering the American labor force.
Stocks on Wall Street rose about 1 percent, following gains in Europe on the news, while the dollar rose against the euro and crude oil rebounded from early losses.
"This kind of Goldilocks recovery is what people are looking for," said Rick Meckler, president of hedge fund LibertyView Capital Management LLC in Jersey City, New Jersey.
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MSCI's all-country world index of 45 country indexes rose 0.7 percent, while the FTSEurofirst 300 of leading European shares gained 1.3 percent.
On Wall Street, the Dow Jones industrial average was up 175.32 points, or 1.17 percent, at 15,215.94. The Standard & Poor's 500 Index was up 16.68 points, or 1.03 percent, at 1,639.24. The Nasdaq Composite Index was up 28.67 points, or 0.84 percent, at 3,452.72.
The euro fell to the day's lows against the dollar after the jobs report, touching session lows of $1.3193 and was last at $1.3201, down 0.33 percent.
Against the yen, the dollar gained about 0.2 percent to 97.11.
"This will calm some of the volatility in the markets, as people were very concerned about an aberrational number in particular being too strong and how that would aggressively move the Fed's disposition in terms of tapering," said Rick Rieder, co-head of Americas fixed income at BlackRock in New York.
But volatility is likely to pick up because of news in coming weeks about European growth, U.S. economic data and Japan's direction, he said. The Fed may begin to scale back its asset purchases moderately some time around September, in line with market expectations, Rieder said.
German Bund futures pared gains and U.S. government debt fell in choppy trade on the view the U.S. payrolls data was not enough to hasten a scaling back in Fed stimulus.
Benchmark 10-year U.S. Treasury notes were down 15/32 in price to yield 2.13 percent.
Bund futures initially fell as low as 143.25 before recouping those losses. They were last 20 ticks up on the day at 143.65 compared with 143.80 before the data.
Brent futures rose above $104 a barrel, supported by expectations of ongoing U.S. economic stimulus, putting the contract on course for its biggest weekly gain since late April.
Brent crude gained 90 cents to $104.51 a barrel, while U.S. oil rose 98 cents to $95.74 a barrel.
(Editing by Catherine Evans and Dan Grebler)