Global stocks cheered by potential dovish Fed; dollar gains

Fri Sep 2, 2016 4:40pm EDT
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By Sam Forgione

NEW YORK (Reuters) - U.S. shares inched higher and European shares rallied on Friday after weaker-than-expected U.S. jobs data gave the Federal Reserve more leeway to stand pat on interest rates, while the dollar gained and longer-dated Treasury yields edged up.

U.S. nonfarm payrolls rose by 151,000 jobs in August after an upwardly revised 275,000 increase in July, with job cuts in manufacturing and construction, the Labor Department said. Economists polled by Reuters had forecast payrolls rising 180,000 last month.

Fed funds futures on Friday suggested traders saw a 21-percent probability of a Fed rate hike later this month, down from Thursday's probability of 24 percent, according to CME Group's FedWatch program.

Rate hike probabilities for September and December had risen after last Friday's remarks by Fed Chair Janet Yellen that the case for raising rates had strengthened in recent months.

U.S. and European share markets cheered the jobs figures' implication that the Fed may wait until December to act.

"People are taking a little bit of a relief that it wasn’t a 200,000 plus print, certainly in the equity market," said Sean Lynch, co-head of global equity strategy at Wells Fargo Investment Institute in Omaha, Nebraska.

MSCI's all-country world equity index .MIWD00000PUS was last up 2.94 points, or 0.7 percent, at 420.29.

The Dow Jones industrial average .DJI closed up 72.66 points, or 0.39 percent, at 18,491.96. The S&P 500 .SPX ended up 9.12 points, or 0.42 percent, at 2,179.98. The Nasdaq Composite .IXIC closed up 22.69 points, or 0.43 percent, at 5,249.90. [nL1N1BE1KT]   Continued...

Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., August 31, 2016.  REUTERS/Brendan McDermid