* Fewer-than-expected U.S. job losses support rebound view
* Dow rises to 9-mth high, European shares reverse losses
* U.S. Treasury yields jump, near 2-mth peak
By Jeremy Gaunt and Al Yoon
LONDON/NEW YORK, Aug 7 (Reuters) - Better-than-expected
U.S. jobless data on Friday reinforced views the recession was
easing, setting a positive course for American and European
shares and stripping demand for government bonds.
The dollar gained against the yen and euro, and Treasury
bond yields rose their highest in nearly two months.
The U.S. Labor Department said employers cut 247,000 jobs
in July, and that the unemployment rate eased for the first
time since April 2008, to 9.4 percent. Economists polled by
Reuters forecast a 320,000 job loss. For details, see
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"This is the best showing (since) prior to the financial
meltdown, and those are important benchmarks to achieve," said
Richard Dekaser, president of Woodley Park Research in
Washington, D.C.
Economic data since March has suggested the U.S. economy
was resuscitating itself in fits and starts, but the numbers
have been enough to fuel significant rallies in financial
markets drubbed over the past year.
A less dire economic outlook for the world's largest
economy helped renew demand in Europe, where the pan-European
FTSEurofirst 300 <> index of top shares rose 1.3 percent
to 950.38 after a stay in negative territory.
The European benchmark index is up more than 47 percent
from its record low on March 9, and the Dow Jones industrial
average of blue chip U.S. stocks rose <> 1.6 percent to a
9-month high of 9,402.19.
Among top advancers, embattled insurer American
International Group Inc <AIG.N>, which has received $180
billion in taxpayer aid, jumped 18.3 percent to $26.66 after
reporting its first profit in seven quarters.
Asian markets climbed ahead of the U.S. data, reflecting
the trend of positive earnings results that have buoyed most
financial markets recently. The Nikkei <> rose 0.2 percent
to 10,412.09, its highest close since Oct. 6.
Global stocks recovered from losses, with MSCI's
all-country world index <.MIWD00000PUS> adding 0.4 percent.
Although U.S. jobs continued to be lost in large numbers in
July, the latest report was seen as an improvement. Employment
momentum often steers future consumer sentiment and spending.
"From a psychological standpoint, the unemployment rate
falling will have some impact on consumer psyches. A tick down
is a positive thing," said Tom Porcelli, market economist at
RBC Capital Markets in New York.
BOND YIELDS RISING
The dollar rose against both the euro and yen after the
report and reversed losses against a basket of currencies
<.DXY> to stand 1.2 percent higher at 78.97.
The euro declined 0.97 percent to $1.4207 <EUR=>. The
dollar rose 2.09 percent to 97.43 against the yen <JPY=>, which
tends to suffer from signs of an improving world economy.
Treasury bond yields climbed as investors speculated that
the recovery could set the stage for faster inflation, which
erodes the fixed returns on the securities. That could present
headwinds for the global economy and equity markets in terms of
higher interest rates.
Higher interest rates "would be the negative spin on some
good news," said Linda Duessel, a market strategist at
Federated Investors in Pittsburgh. "If that happens, it would
underline the concept that the (stock) market is looking for
reasons to pull back."
The benchmark 10-year Treasury yield rose nearly 0.10
percentage point to 3.86 percent, while two-year yields
increased by 0.11 point to 1.31 percent.
Two- and 10-year euro zone government bond yields
<EU2YT=RR><EU10YT=RR> rose to seven- and one-week highs,
respectively, also indicating concerns that official short-term
interest rates may be increased.
Crude oil futures prices floated near unchanged. U.S. light
sweet crude oil <CLc1> fell 1 percent to $71.22 per barrel.
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