GLOBAL MARKETS-Global equities climb, dollar drops as U.S. jobs data ease inflation fright

* U.S. nonfarm payrolls disappoints at 559,000

* Stronger reading would have prompted stimulus cut fears

* Indexes: Dow up 0.34%, S&P rose 0.65%; Nasdaq gains 1.23%

* Global asset performance http://tmsnrt.rs/2yaDPgn

* World FX rates http://tmsnrt.rs/2egbfVh
(Recasts, adds quotes, details throughout; changes byline,
dateline, previous LONDON)

By Katanga Johnson

WASHINGTON, June 4 (Reuters) - Global stocks, oil and gold
rallied while the dollar fell on Friday, after U.S. nonfarm
payrolls data showed hiring increased in May as the coronavirus
pandemic eased, but not quite as much as expected, tempering
expectations the Federal Reserve will tighten monetary policy
sooner, rather than later.

The hotly anticipated U.S. nonfarm payrolls data 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 0.38% after
hitting a record high touched earlier this week, while MSCI's
gauge of stocks, which tracks shares in 50
countries across the globe, gained 0.60%.

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.

"This lower payrolls number should keep investor concerns
about inflation muted – as long as the job market remains
depressed, it's hard to see wage inflation jumping higher," said
Chris Zaccarelli, chief investment officer at Independent
Advisor Alliance in Charlotte, North Carolina. Zaccarelli added
that there may be some lingering concerns about overall price
inflation as the Fed keeps rates lower for longer amid
unprecedented fiscal stimulus.

Market whispers had been for a stronger number, analysts
said.

On Wall Street, the Dow Jones Industrial Average rose
116.06 points, or 0.34%, to 34,693.1, the S&P 500 gained
27.38 points, or 0.65%, to 4,220.23 and the Nasdaq Composite
added 166.80 points, or 1.23%, to 13,781.30.

U.S. Secretary Marty Walsh in an interview with CNBC on
Friday welcomed a "good, solid" jobs report and predicted more
Americans would get back to work in the next couple of months as
the pandemic wanes with increased vaccinations.

The dollar index fell 0.365%, with the euro up
0.33% to $1.2164, down from a multiweek high hit earlier on
Friday.

Latin American currencies firmed, with Mexico's peso, which
gained 1.19% versus the U.S. dollar at 19.91, set for its
biggest one-day gain in three weeks and Brazil's real near
six-month highs.

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.

Meanwhile, new orders for U.S.-made goods fell more than
expected in April as a global semiconductor shortage weighed on
the production of motor vehicles and electrical equipment,
appliances and components.

The Commerce Department said on Friday that factory orders
dropped 0.6% in April after increasing 1.4% in March. Economists
polled by Reuters had forecast factory orders slipping 0.2%.
Orders surged 14.2% on a year-on-year basis.

Manufacturing, which accounts for 11.9% of the U.S. economy,
is being supported by a shift in demand toward goods from
services during the pandemic. But the strong demand is straining
supply chains.

Benchmark 10-year Treasury notes last rose 16/32
in price to yield 1.5738%, from 1.627%, while euro zone bond
yields edged lower with investors looking for cues about the
Fed'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.

Meanwhile, Fed chair Jerome Powell told an audience on
Friday that "climate change is not something we directly
consider in setting monetary policy" as he discussed on how the
financial sector might address climate risks.

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.

"Will prolonged, low-wage inflation allow for a longer
period of low, overall price inflation to reign? Or will a Fed
that is slow to raise rates - because they are concerned about a
weak labor market - create a higher-than-expected overall
inflation regime? It's hard to know in advance, but we are all
watching the experiment in real time and the consequences for
all of us are high," added Independent Advisor Alliance's
Zaccarelli.

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.

Spot gold added 1.2% to $1,893.04 an ounce after a 2%
tumble on Thursday, its biggest since February.

U.S. crude recently rose 0.54% to $69.18 per 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
was at $71.57, up 0.36% on the day.

(Reporting by Katanga Johnson in Washington; editing by
Jonathan Oatis)