* U.S. stocks edge higher amid growing hopes of recovery
* U.S. dollar rises as jobs data dulls market optimism
* Government debt falls as job losses less than feared
* Oil prices slip as jobs report points to less demand
(Adds close of U.S. markets)
By Herbert Lash
NEW YORK, April 3 (Reuters) - U.S. stocks edged higher on
Friday as growing sentiment that the worst of a deep financial
crisis may have passed overshadowed glum data on the U.S. labor
market and pared the safe-haven bid for bonds.
Risk aversion receded, with gold falling slightly and crude
oil barely gaining as the loss of 663,000 U.S. jobs in March
failed to weigh heavily on sentiment.
U.S. Treasury and short-dated euro zone government bond
prices also fell on the perception of improving economic
conditions and rising optimism that action taken on Thursday by
Group of 20 leaders in London will help spur recovery.
Commodities, marked by a 5 percent surge in copper to
5-month highs, rose on hopes of improved demand after the G20
leaders agreed on a $1.1 trillion package to revive growth.
"At least for the moment, there seems to less demand for
flight to safety, but I don't know if this is going to be a
pattern that is going to continue," said Bill O'Neill, managing
partner of commodities firm LOGIC Advisors.
U.S. stocks see-sawed for most of the day but staged a late
rally, sending the Dow to its best four-week winning streak
since 1933, lifted by robust results from Research in Motion
and comments by Federal Reserve Chairman Ben Bernanke.
For the week, the Nasdaq shot up 5 percent, the Dow added
3.1 percent and the S&P500 gained 3.3 percent.
The Dow Jones industrial average <> closed up 39.51
points, or 0.50 percent, at 8,017.59. The Standard & Poor's 500
Index <.SPX> added 8.12 points, or 0.97 percent, at 842.50. The
Nasdaq Composite Index <> gained 19.24 points, or 1.20
percent, at 1,621.87.
European shares closed lower, with drugmakers and oil
companies falling as contractions in the British and euro zone
services sectors provided further evidence of recession on top
of the U.S. jobless report.
The pan-European FTSEurofirst 300 index of top shares fell
1.3 percent to 771.60 points. The index rose 7.1 percent for
the week and is up more than 19 percent from a lifetime low on
March 9.
U.S. Treasury and short-dated euro zone government bond
prices fell on the perception of improving economic conditions,
which undercut the safe-haven bid for bonds.
Investors continued to sell government bonds, notably
shorter-dated euro zone paper, even as stocks gave back some
gains in early trade a day after the European Central Bank
disappointed analysts by cutting interest rates by less than
expected.
"Investors are more confident than they were that we could
be at the bottom of the downturn globally," said Nick
Stamenkovic, bond strategist at RIA Capital Markets in
Edinburgh. "That's taken the shine off bonds, supporting the
risk assets, particularly equities," he said.
The benchmark 10-year U.S. Treasury note <US10YT=RR> fell
38/32 in price to yield 2.90 percent. The 2-year U.S. Treasury
note <US2YT=RR> fell 5/32 in price to yield 0.96 percent.
Oil prices also see-sawed on Friday, hovering around $52 a
barrel, with investors pulled by hopes that demand is picking
up while data still shows a U.S. economy mired in recession.
"The oil market is struggling between hope and reality,
much like what you also see in other markets," said Andy Lebow,
a broker at MF Global in New York. "The reality is that there
is a dismal demand picture and so it is hard for oil to sustain
gains."
Optimism that the economy will soon turn curtailed losses.
U.S. light crude for May delivery <CLc1> settled down 13 cents
at $52.51, retaining most of Thursday's $4.25 gain.
London Brent crude <LCOc1> gained 48 cents to $53.23 a
barrel by 2:56 p.m. EDT (1856 GMT).
Gold prices dropped 1.3 percent. U.S. gold futures for June
delivery <GCM9> settled down $11.60 at $897.30 in New York.
"I think there are a number of things that have made people
conclude that things are not as bad as they were a month or two
ago," said Standard Chartered analyst Daniel Smith. "But I
think the optimism is a bit overdone."
The dollar rose against the yen after the U.S. jobs report
was not as bad as many had feared and did little to dampen an
improved appetite for risk.
Gains were limited as the dollar tends to rise in response
to bad news because investors see it as the safest store of
value at a time when economies across the globe are shrinking.
"There had been a degree of enthusiasm that perhaps the
world economy has seen the worst, and the jobs data tempered
that enthusiasm a bit," said Vassili Serebriakov, currency
strategist at Wells Fargo in New York.
In late New York trading, the dollar was up 0.7 percent at
100.26 yen <JPY=> after rising as high as 100.37 yen, the
highest level since November, according to Reuters data.
The euro was up 0.2 percent at $1.3484 <EUR=> after dipping
to $1.3366 after the jobs data.
(Reporting by Steven C. Johnson, Richard Leong in New York and
Jamie McGeever, Brian Gorman, Chris Baldwin in London; writing
by Herbert Lash; Editing by Dan Grebler)
