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NEW YORK (Reuters) - Bond prices climbed on Friday after a weak U.S. employment report increased worry about slowing global growth, while global equities were able to rebound from an initial selloff to close with strong gains.
The economy created 142,000 jobs in September, well short of the 203,000 forecast, and August numbers were revised sharply lower to show only 136,000 jobs, the U.S. Labor Department said.
Bond prices jumped, with benchmark U.S. Treasury yields falling to their lowest level in slightly over 5 months. The 10-year U.S. Treasury note was last up 17/32 in price to yield 1.9824 percent.
U.S. stocks managed to rebound from sharp declines, buoyed by gains in the beaten down energy and materials sector.
"These numbers are weaker than expected, but not alarmingly weak," said Brad Lipsig, senior portfolio manager at UBS Wealth Management in New York.
"The risk is that they continue on a weakening trajectory. This could mean that weakness in overseas economies is now affecting the U.S. economy."
Years of cheap central bank cash after the 2007-2008 financial crisis have supported asset prices, but recent signs of a slowdown in global economic growth, and the Fed's decision last month to postpone raising interest rates, have unnerved investors betting on a return to more normal policy.
The weak jobs report likely pushes out the timeline for the Fed to raise interest rates for the first time in nearly a decade. Fed funds futures implied traders see nearly no chance the U.S. central bank would end its near-zero rate policy in October, according to CME Group's FedWatch program, with a hike likely to occur in March 2016.
The Dow Jones industrial average rose 200.36 points, or 1.23 percent, to 16,472.37, the S&P 500 gained 27.54 points, or 1.43 percent, to 1,951.36 and the Nasdaq Composite added 80.69 points, or 1.74 percent, to 4,707.78.
The pan-European FTSEurofirst 300 also erased early gains, buoyed by utility stocks, and closed down 0.4 percent. MSCI's all-country world stock index climbed 1.1 percent and was up 0.8 percent for the week.
The U.S. dollar index of major currencies which had advanced before the employment report was down 0.3 percent to 95.936 after hitting a two-week low of 95.218.
In contrast, gold prices reversed course and climbed more than 2.2 percent to last trade at $1,282.80 an ounce, its biggest percentage jump since mid-January. They had fallen to a two-week low before the report. Silver advanced 5.1 percent, its biggest percentage gain since December, to $15.17 an ounce.
Concerns about U.S. monetary policy and a slowdown in emerging markets led by China have hit commodities markets and related stocks, like Glencore, this week and ramped up volatility.
After earlier declines, copper also moved higher and was up 0.1 percent to $5,100.15 per tonne, as the increased possibility the Fed will hold off on a rate hike tempered growth worries.
U.S. crude settled up 1.8 percent to $45.54 per barrel. Brent settled up 0.9 percent to $48.13 after a report showing the fifth weekly decline in the U.S. oil rig count added to signs of falling production in the world's top oil consumer.
Reporting by Chuck Mikolajczak; editing by Clive McKeef and Nick Zieminski