World stocks, euro rise on US jobs data

World stocks and the euro were higher midsession on Friday after stronger-than-expected US employment data eased fears of another global recession.

The US Labor Department said nonfarm payrolls rose by 103,000, above expectations for a 60,000 rise. Jobs gains for prior months were also revised higher.

"This is clearly a vote for the slow growth camp rather than recession camp," said Leslie Barbi, head of fixed income at RS Investments in New York, which manages USD 30 billion in bonds.

"But growth is still slow and the unemployment rate is unchanged, and this does nothing to solve Europe's problems," he added.

But US stocks lost some ground late morning as investors continued to worry about the impact of a possible debt default by the Greek government after credit rating agencies downgraded some Portuguese and British banks as well as the Franco-German group Dexia.

The downgrades come ahead of summit talks on Sunday between German Chancellor Angela Merkel and French President Nicolas Sarkozy on ways to strengthen euro zone banks.

The Dow Jones industrial average gained 30.58 points, or 0.27%, at 11,153.91, but the Standard & Poor's 500 Index was down 2.42 points, or 0.21%, at 1,162.55. The Nasdaq Composite Index fell 22.65 points, or 0.90%, to 2,484.17.

U.S. bank shares dropped 2.1% according to BKX index.

World stocks measured by the MSCI All-Country World index gained 0.8%.

Euro up, bonds down

The euro, which has fallen back from a 2011 peak near USD 1.50 in May, rose 0.54% to USD 1.3504.

Aggressive liquidity measures that the European Central Bank (ECB) unveiled on Thursday to help lenders facing straitened wholesale funding conditions also supported risk appetite, giving a boost to the euro.

However, earlier on Friday German data showed industry output in the European giant dropping 1.0% in August, a smaller-than-expected decline.

Prices of US government bonds were lower after the US employment data. Safe-haven investments such as US Treasury bonds sold off. Thirty-year Treasuries led losses, falling more than 2 points in price to yield 3.0629%.

US crude oil prices rose 0.59% to USD 83.08 per barrel.