An April rebound in US jobs growth boosted Wall Street and supported the dollar on Friday, while a surprise Conservative victory cast away fears of a hung British Parliament and sparked a rally in sterling and European stock markets.
Global bond markets recovered for a second day, focusing on weak aspects of the latest US jobs report, which may cause the Federal Reserve to be even more cautious toward ending its near- zero interest rate policy later this year.
Oil prices posted their first weekly loss in a month. They gave up earlier gains tied to data showing a strong rise Chinese crude imports.
Gold edged higher following two days of losses as lower bond yields revived some appeal of holding the precious metal.
The April US jobs data showed a solid 223,000 increase after a disappointing March, when hiring slowed sharply due partly to tough weather. The unemployment rate dropped to 5.4 percent in April, near a seven-year low.
"It truly isolated the March miss as an anomaly. The labor market is back on track," said Phil Orlando, chief equity market strategist at Federated Investors Inc in New York.
The April hiring snapback, however, was less impressive after a further downward revision of March's weak reading to 85,000. The perception of the April data was also undercut by a meager 0.1 percent rise in average hourly earnings.
The April jobs figures put the Fed on track for a rate increase as early as September, a Reuters poll showed. But US short-term interest-rate futures implied traders don't expect a Fed rate hike until December at the earliest, based on CME FedWatch.
That Fed outlook sparked a rally in US Treasuries, sending benchmark yields further below the year's peaks set during a dramatic global bond market rout spurred by heavy supply and reduced pessimism about Europe.
The yield on 10-year US Treasuries US10YT=RR was down to 2.150 percent from a 5-1/2 month peak of 2.312 percent early Thursday. The German 10-year Bund yield DE10YT=RR ended at 0.546 percent, well below the near 0.80 percent level seen on Thursday. [.N] [GVD/EUR]
Wall Street posted a solid bounce with the Standard & Poor's notching its best daily gain in seven weeks.
The Dow Jones industrial average .DJI closed up 264.98 points, or 1.48 percent, to 18,189.04, the S&P 500 .SPX ended up 27.91 points, or 1.34 percent, to 2,115.91 and the Nasdaq Composite .IXIC finished 58.00 points, or 1.17 percent, higher to 5,003.55. [.N]
European bourses rallied after the UK's Conservative Party was set to govern Britain for another five years, erasing worries of a hung parliament.
Talk of progress in the negotiations between Greece and its creditors also supported sentiment on European stocks.
The FTSEurofirst 300 index of top pan-European shares .FTEU3 closed up 2.8 percent at 1,590 with Britain's FTSE 100 .FTSE up 2.3 percent for its second biggest daily gain in 2015. [.EU]
Earlier, Tokyo's Nikkei closed up 0.45 percent. [.T]
The MSCI world equity index .MIWD00000PUS, which tracks shares in 45 nations, rose 1.35 percent, to 439.13, ending the week with a 0.3 percent gain.
In the currency market, the pound GBP=D4 reached a 10-week high against the dollar following the surprise Conservatives win. It was last up 1.4 percent at $1.5457.
The greenback fared better against other major currencies. The dollar index .DXY rose 0.16 percent to 94.784 following the U.S. jobs data and disappointing German trade and industrial output figures.
Brent crude LCOc1 settled down 15 cents, or 0.23 percent, at USD 65.39 a barrel. US crude CLc1 settled up 45 cents, or 0.76 percent, at USD 59.39 per barrel. [O/R]
Spot gold prices XAU= rose USD 3.44 or 0.29 percent, to USD 1,187.74 an ounce, bringing its weekly gain to 0.8 percent. [GOL/]