* Stocks turn positive, euro falls after Trichet, jobs data
* ECB raises rates as expected, U.S. payrolls down 62,000
* Oil holds near $145, keeping inflation fears alive
By Natsuko Waki
LONDON, July 3 (Reuters) - The euro fell and shares and
government bonds rallied on Thursday as the European Central
Bank poured cold water on speculation of further aggressive
interest rate hikes after raising them as expected.
Stocks also recovered sharply from a global sell-off, which
knocked world shares to a five-month low earlier, after U.S.
jobs came largely in line with expectations.
The ECB became the first G7 central bank to raise interest
rates since the credit crisis erupted last August, increasing
the euro zone's benchmark cost of borrowing to 4.25 percent.
However, the euro fell broadly as investors scaled back
further interest rate hikes after ECB President Jean-Claude
Trichet told a news conference he had no bias on monetary
policy.
"For now Trichet seems to be drawing a line under today's
move," said Philip Shaw, chief economist at Investec.
"Things might change going forward, but for now there's
nothing to suggest the ECB has an itchy trigger-finger."
The FTSEurofirst 300 index <> erased early losses to
rise 0.2 percent, having fallen to a level not seen since July
2005 earlier. MSCI's main world equity index <.MIWD00000PUS>
fell 0.5 percent to its lowest since Jan. 23.
JOBS NON-SURPRISE
Data showed U.S. employers cut workers from their payrolls
for the sixth straight month in June for the country's longest
losing streak since 2002, with 62,000 jobs lost from non-farm
payrolls last month.
"The market was geared up for weak numbers and so this isn't
a big surprise relative to the whisper number," said Carl Lantz,
interest rate strategist at Credit Suisse in New York.
U.S. stock futures <SPc1> were indicating a firmer open on
main indexes later.
In the currency market, the euro fell around 1-1/2 U.S.
cents to hit $1.5743 <EUR=>, having risen to a 2-1/2 month high
earlier.
Earlier, a weaker dollar -- which policymakers increasingly
worry is inflationary -- pushed crude oil <CLc1> to fresh record
highs above $145 a barrel.
A senior Japanese government official said leaders from
Group of Eight rich nations will discuss concerns that a weak
U.S. dollar is a contributing factor to oil prices when they
gather next week in Japan.
Emerging sovereign spreads <11EMJ> widened 1 basis point
while emerging stocks <.MSCIEF> fell 1.7 percent.
The September Bund future <FGBLU8> rose 27 ticks while
interest rate futures also rose. Investors are expecting euro
zone rates to stand at around 4.5 percent by year-end.
Gold <XAU=> fell to $932.50 an ounce.
