US blue chips surged to an early 3-year high on Friday as encouraging jobs growth kicked the second quarter off to a strong start for world stocks, even as a Fed official's cautious views on the economy hurt the dollar.
Wall Street's Dow Jones industrial average hit its highest level since June 2008 after the government reported a second straight month of robust job gains in March.
Oil closed at peaks not seen since the third quarter of 2008, while gold slipped as investors' appetite for risk grew.
But US Treasuries rose after New York Federal Reserve Bank President William Dudley said recovery in the economy and labor market still lagged the central bank's expectations, and interest rates were unlikely to rise so soon, as some in the market feared.
The Labor Department said a total of 216,000 nonfarm jobs were added in March, well above the 190,000 expected in a Reuters poll. It also said revised January and February figures showed more jobs than previously reported. The unemployment rate for March fell to a two-year low of 8.8%.
Job numbers widely cheered
Notwithstanding Dudley's comments, the job numbers were widely cheered by the market.
"We are growing, we are getting more profitable, we are going to see more jobs. That means consumers are going to do better. That is the better picture to look at," said Marc Pado, US market strategist at Cantor Fitzgerald & Co in San Francisco.
The Dow Jones closed up 56.99 points, or 0.46%, at 12,376.72.
The Standard & Poor's 500 Index rose 6.58 points, or 0.5%, to 1,332.41. The S&P 500 managed to push through a technical level it has been unable to sustain in the past, but it may need help to break to new multiyear highs.
The technology-laced Nasdaq Composite Index added up 8.53 points, or 0.31%, at 2,789.60.
Global stocks, as measured by the MSCI All-Country World Index, rose 0.7%.
The dollar fell against the euro and a broad basket of currencies after Dudley, one of the Fed's key policymakers, signaled further support for the economy.
Markets have been getting mixed signals from various Fed officials over the past two weeks on growth and whether the central bank is keen to keep the easy monetary policy it maintained since the financial crisis or is looking to raise interest rates.
Dudley said he saw no reason yet to reverse course.
"I would be surprised if we didn't finish the full QE2," he said, referring to the central bank's USD 600 billion stimulus program, which some other Fed officials have indicated could be ended prematurely.
"If they indicated they were going to continue with QE2, then that is a lot of the market," said Terry Morris, senior equity manager for National Penn Investors Trust Company in Reading, Pennsylvania. "A lot of good news, a lot of momentum and the Fed is accommodative."
ECB rate hike fear hurts dollar
Another factor that hurt the dollar was growing belief that the European Central Bank will be the first central bank to raise interest rates at a policy meeting next Thursday.
The euro rose 0.5% to USD 1.4231 , well off a USD 1.4059 low. Traders said stop-loss orders around USD 1.4060 led to some euro buying.
The single currency has risen some 6% in 27 days -- from a low of USD 1.3428 on February 14 to USD 1.4249 last week, the 2011 high. Traders said a break of that level could prompt a run at USD 1.4283, the November 4 peak.
The US Dollar Index, which pits the greenback against a basket of major currencies, was off 0.02% at 75.842.
Oil treasuries up; gold down
London Brent crude futures for May finished up USD 1.34 at USD 118 a barrel. US crude settled up USD 1.22, or 1.14%, at USD 107.94 a barrel, its highest close since September 2008.
US Treasuries erased early losses almost entirely on Dudley's remarks.
The benchmark 10-year US Treasury note was up 4/32 in price for the day, yielding 3.46% after being down 10/32 right after the bullish March employment report. US federal fund futures were slightly lower, with the January 2012 contract down 0.01% at 99.6600.
Safe-haven gold slipped as the jobs data increased investors' risk appetite. Spot gold , which tracks trades in bullion, dropped 0.1% to trade above USD 1,428 an ounce, off its low at USD 1,412.55 hit earlier in the session. US gold futures for June delivery finished down 0.7% at USD 1,428.10 an ounce.