* Stocks rise on outsized U.S. jobs gains
* U.S. added 287,000 jobs in June
* Jobs report seen as unlikely to boost chances of Fed rate
hike
(Updates to U.S. market open, adds quotes, changes dateline,
previous LONDON)
By Dion Rabouin
NEW YORK, July 8 (Reuters) - Stocks jumped on Friday and
U.S. Treasury yields edged up from this week's record lows after
data showed that U.S. job growth accelerated rapidly in June,
surpassing even the most optimistic of forecasts.
The U.S. economy added 287,000 jobs last month, according to
the Labor Department, smashing the consensus forecast of
175,000, and wiping off the table any lingering expectations
that the Federal Reserve might cut interest rates in the coming
months.
U.S. equity markets advanced on the news, led higher by the
financial sector.
The Dow Jones industrial average .DJI rose 173.99 points,
or 0.97 percent, to 18,069.87, the S&P 500 .SPX gained 21.88
points, or 1.04 percent, to 2,119.78 and the Nasdaq Composite
.IXIC added 52.08 points, or 1.07 percent, to 4,928.89.
"What this report does is it assuages fears about the
economy losing momentum. That's been weighing on the minds of
investors," said Quincy Krosby, market strategist at Prudential (LON:PRU)
Financial in Newark, New Jersey.
"In order for the market to keep going higher, there needs
to be assurance that the economy is on solid footing and that
the most important component of the economy, which is the U.S.
consumer, is still gaining."
European stocks extended gains, with Germany's DAX stock
index .GDAXI rising more than 2 percent to lead the region's
bourses. Europe's FTSEuroFirst 300 index of top shares was up
1.15 percent .FTEU3 .
Still, the upbeat U.S. jobs report failed to significantly
alter the longer term outlook for U.S. interest rates, which are
expected to be kept on hold for at least a year, according to
Fed funds futures prices.
Investors see a zero percent chance the Federal Reserve will
raise U.S. interest rates at this month's policy meeting on July
27 and see less than a 25 percent chance of a rate hike before
year-end, according to CME Group's FedWatch tool.
The 10-year U.S. Treasury yield rose 5 basis points to a
session high of 1.42 percent US10YT=RR after the release of
the report, moving further away from Tuesday's record low 1.321
percent.
However, worries over the world economy following Britain's
vote to leave the European Union and a deepening crisis in
Italian banks continue to cloud investor sentiment globally.
"Even though the Fed's dual mandate involves full employment
and price stability, they're looking far beyond these two
parameters to figure out what they're going to be doing," said
Subadra Rajappa, head of U.S. rates strategy at Societe Generale (PA:SOGN)
in New York.
"They're much more in risk management mode, much more
concerned about developments overseas and it's not clear how
global factors will affect the U.S. economy."
Low expectations for a Fed rate hike also pushed the U.S.
dollar down against the yen JPY= . While the dollar rose
immediately after the jobs report, climbing to a two-week high,
those gains evaporated and the dollar traded mostly flat on the
day at 100.80 yen.
The dollar .DXY was little changed from its late Thursday
levels against a basket of major currencies, at 96.383.
The first measure of UK consumer confidence since the Brexit
referendum two weeks ago showed the joint-steepest decline in
morale since 1994, according to research company GfK on Friday.