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* U.S. non-farm 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
LONDON, June 4 (Reuters) - Stocks, oil and gold rallied
while the dollar fell on Friday, as a weaker-than-expected U.S.
jobs report eased concerns that a fast recovery in the world's
biggest economy could prompt the Federal Reserve to shut off the
stimulus taps sooner.
The hotly anticipated U.S. non-farm payrolls data released
at 1230 GMT showed 559,000 jobs created in May, a sharp increase
in hiring from April but below the 650,000 expected from a
Reuters poll of analysts.
The pan-European STOXX 600 index rose 0.15% by 1347
GMT, trading just below its record high touched earlier this
week, and U.S. stock futures extended gains with S&P 500 e-minis
up 0.58%.
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 higher 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 0.47% after the data release,
down from a multi-week high hit earlier on Friday.
The greenback had rallied on Thursday, notching up its
biggest daily gain in a month, after weekly U.S. jobless claims
fell below 400,000 for the first time since the pandemic started
more than a year ago and private payrolls increased by
significantly more than expected.
The 10-year Treasury yield held at 1.625%, while
euro zone bond yields edged lower with investors looking for
cues about the U.S. Federal Reserve's bond-buying tapering
discussions.
President Joe Biden will meet with the main Republican
negotiator on infrastructure spending later on Friday, as they
try to hash out a deal that can satisfy both camps.
Airlines stocks 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 non-farm payrolls
numbers knocked back those expectations, weakening Treasury
yields and the dollar, and the pattern repeated on Friday.
Gold rose 1% after a 2% tumble on Thursday, its
biggest since February, trading at around $1,892 per ounce by
1356 GMT.
Oil hit $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 71 cents to $72.00 a barrel,
after reaching the highest since May 2019 in Thursday's session.
U.S. WTI added 77 cents to $69.59 a barrel, the strongest
since October 2018.
(Reporting by Lawrence White and Kevin Buckland; editing by
Jonathan Oatis and David Evans)
