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* U.S. nonfarm payrolls disappoints at 559,000
* Stronger reading would have prompted stimulus cut fears
* Global asset performance http://tmsnrt.rs/2yaDPgn
* World FX rates http://tmsnrt.rs/2egbfVh
By Lawrence White and Kevin Buckland
LONDON, June 4 (Reuters) - Stocks and gold rallied while the
dollar fell on Friday, as a weaker-than-expected U.S. jobs
report eased concerns that a strong recovery in the world's
biggest economy could prompt the Federal Reserve to shut off the
stimulus taps sooner.
The crucial U.S. nonfarm payrolls data released at 1230 GMT
showed only 559,000 jobs created in May, below the 650,000
expected from a Reuters poll of analysts
The pan-European STOXX 600 index was up 0.1% by
1239 GMT, trading just below its record high touched earlier
this week, and contrasting with an earlier 0.3% fall in MSCI's
broadest index of Asia-Pacific shares outside Japan
.
A stronger-than-expected reading would have heightened
worries that the robust economic recovery could push the Fed to
contemplate paring back its bond buying and raising interest
rates.
“It's still a strong number. The way I see it is it's
lacking a certain wow factor that the market was expecting, and
that can help keep rates a bit lower here and the curve a bit
steeper," said Gennadiy Goldberg, interest rates strategist at
TD Securities in New York.
Market whispers had been for a stronger number, he added,
that would somewhat counterintuitively have driven stocks down
on fears the Fed would tighten policy earlier than expected.
The dollar index fell 0.23% immediately after the
data release, down from a multi-week high hit earlier on Friday.
U.S. stock futures extended gains, with S&P 500 e-minis
up 0.26% following a 0.4% loss for the index
overnight.
The 10-year Treasury yield held at 1.6355%,
after advancing nearly four full basis points overnight.
Airlines meanwhile suffered, with British Airways-owner IAG
, Wizz Air and easyJet slipping between
1% and 2% after Britain added seven countries, including Egypt
and Sri Lanka, to its "red list" of destinations that require
hotel quarantine on return to England.
TAPER TALK
While Fed officials have consistently said they expect
current inflationary pressures to be transitory and for
ultra-easy monetary policy to stay in place for some time, they
are also increasingly touting the need to at least start talking
about a tapering of stimulus.
Investors have been carefully parsing the economic data to
gauge whether inflation could prove sticky enough to force the
Fed's hand on tapering.
Last month, much-lower-than-expected nonfarm payrolls
numbers knocked back those expectations, weakening Treasury
yields and the dollar, and the pattern repeated on Friday.
Copper prices rebounded as investors scooped up material at
lower prices. Three-month copper on the London Metal Exchange
gained 0.8% to $9,870 a tonne, having tumbled as much as
3.8% in the previous session.
Gold rose 0.6% after a 2% tumble on Thursday, its
biggest since February, trading at around $1,883 per ounce by
1252 GMT.
Oil rose towards $72 a barrel, trading close to a two-year
high as OPEC+ supply discipline and recovering demand countered
concerns about patchy COVID-19 vaccination rollouts around the
globe.
Brent futures rose 34 cents to $71.64 a barrel,
after reaching the highest since May 2019 in Thursday's session.
U.S. WTI added 40 cents to $69.21 a barrel, just below
$69.40 a day earlier, the strongest since October 2018.
(Reporting by Lawrence White and Kevin Buckland; editing by Kim
Coghill, Mark Heinrich and Jonathan Oatis)
