* U.S. jobs data continues to lift equities
* Dollar weaker vs euro and yen
* U.S. markets closed for Labor Day
By Jeremy Gaunt, European Investment Correspondent
LONDON, Sept 6 (Reuters) - Encouraging news about the U.S.
employment picture continued to spill over onto financial
markets on Monday, lifting world stocks on hopes that a slip
back into recession could be avoided.
The mood continued despite a relatively gloomy outlook from
Olivier Blanchard, chief economist at the International Monetary
Fund, who told France's Le Figaro he expected weak growth in
both the United States and Europe.
Some investors, particularly in Asia, were catching up with
Friday's U.S. jobs data, which was not as bad as some had
feared.
The slowing of the U.S. economy has been one of the major
factors holding investors back over recent months.
MSCI's all-country world stock index <.MIWD00000PUS> and its
Thomson Reuters counterpart <.TRXFLDGLPU> were up more than half
a percent after a nearly 3.7 percent gains for the MSCI last
week.
Europe's FTSEurofirst 300 <> gained around 0.3 percent
while Japan's Nikkei <> earlier closed up 2.05 percent.
"After a string of disappointing numbers, the data last week
provided an element of stability and helped increase risk
appetite," said Henk Potts, equity strategist at Barclays
Wealth.
"When you couple that with the outlook for corporates, it
looks pretty good."
The latest corporate earnings season has been relatively
strong in both the United States and Europe while merger and
aquisition activity in August was the most robust for the month
since 1999.
U.S. markets were closed for the Labor Day holiday.
DOLLAR DIPS
The dollar slipped and looked poised to test a 15-year low
against the yen after failing to retain gains made after U.S.
jobs data.
The euro rose to its highest in three weeks.
"We are seeing some relief from fears about a double-dip
recession in the U.S. helping risk sentiment and the euro," said
Gareth Berry, currency strategist at UBS. "But whether this
sentiment can be sustained or not is difficult to say."
The euro was up 0.1 percent at $1.2907 <EUR=>, having risen
to $1.2918 earlier in the day, its highest since August 12.
The dollar index, a gauge of the greenback's performance
against a basket of six major currencies, fell 0.2 percent on
the day to 81.92 <.DXY>.
Dollar fell 0.14 percent against the yen to 84.20 yen
<JPY=>, not far from a 15-year low of 83.58 hit late last month.
Euro zone government bond yields fell with traders citing
the IMF comments as enough to overcome lingering selling
pressure from the jobs data.
(Additional reporting by Atul Prakash and Anirban Nag; Editing
by Toby Chopra)
