* World stocks up, bonds down on better U.S. jobs data
* U.S. dollar recovers on good economic news for a change
* S&P500 index up 52 pct from March low
* U.S. Treasury yields jump to six-week high
(Updates to close of U.S. markets)
By Al Yoon
NEW YORK, Aug 7 (Reuters) - World stocks ended higher on
Friday, while bonds took a hit and the U.S. dollar recovered
after better-than-expected U.S. unemployment data reinforced
the view that the global economic slump may be nearly over.
The U.S. unemployment rate fell to 9.4 percent in July, the
first fall in 15 months, while employers cut 247,000 jobs
compared to a forecast of 320,000 based on a Reuters poll. For
details see [].
"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.
June was likely to be the last month of the U.S. recession,
according to investment bank Barclays Capital after the jobs
data was reported.
In Germany, Europe's largest economy, the recession likely
ended in April this year, Barclays Capital said, and data on
Friday showed German exports surged at their fastest pace in
two years in June.
Italy's economy shrank by a less-than-expected 0.5 percent
in the second quarter this year, according to data on Friday,
but Italy and Spain will remain a drag on recovery for the euro
zone area, economists at the UK investment bank also said.
Global stocks ended up with MSCI's all-country world index
<.MIWD00000PUS> adding 0.29 percent on Friday.
The benchmark U.S. S&P500 stock index <.SPX> gained 1.34
percent to 1,010.48. The S&P500 index has recovered 52 pct from
12-year lows seen on March 6 and is now at its highest since
October 2008.
The benchmark European stock index, the FTSEurofirst 300
<> rose 1.3 percent to 950.38, its highest close since
Nov. 5 last year.
Earlier Japan's Nikkei index <> average hit its
highest close in 10 months on Friday, helped by gains in shares
of companies such as Toray Industries <3402.T> that had
positive surprises in their earnings reports.
Among top advancers in the U.S. stock market were
embattled insurer American International Group Inc <AIG.N>,
which has received $180 billion in taxpayer aid, and saw its
stock up 20.46 percent to $27.14 on Friday after reporting its
first profit in seven quarters.
Although U.S. jobs continued to be lost in large numbers in
July, the latest report was seen as a distinct improvement.
"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
U.S. Treasury bond yields climbed as investors speculated
that the recovery could set the stage for faster inflation,
which erodes the fixed returns on securities.
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 note <US10YT=RR> yield rose
to a six-week high around 3.86 percent, as did the two-year
note <US2YT=RR> yield which jumped to 1.30 percent.
Two- and 10-year euro zone government bond yields
<EU2YT=RR> <EU10YT=RR> rose to seven- and one-week highs,
respectively, though European Central Bank President
Jean-Claude Trichet said the world economy is no longer in
freefall but it is still contracting and vigilance is needed.
"We are coming out of the period of freefall but we are
still seeing a fall (in economic activity) and we should guard
against too much optimism," Trichet said during an interview
with France's RTL radio.
DOLLAR RALLIES ON GOOD NEWS FOR A CHANGE
The U.S. dollar, which in recent months has tended to fall
on good economic news as investors' appetite for risk in other
currencies returned, on Friday recovered sharply.
U.S. interest rates were cut further and faster by the
Federal Reserve as the economy slumped and the banking system
tottered in 2008, leaving investors to worry that U.S. rates
might rise quickly again if the recession ends in late 2009.
The euro <EUR=> fell 1.3 percent on Friday to around
$1.4168, while the U.S. dollar rose 2.16 percent against the
yen <JPY=> to around 97.50 yen. The ICE Futures Exchange's U.S.
dollar index <.DXY> ended up 1.17 percent at 78.895.
(To read Reuters Global Investing Blog click on
http://blogs.reuters.com/globalinvesting; for the MacroScope
Blog click on http://blogs.reuters.com/macroscope; for Hedge
Fund Hub click on http://blogs.reuters.com/hedgehub)
(Editing by James Dalgleish)
