* Jobs data adds to view U.S. economy is gaining strength
* US dollar drops against euro, slips vs. currency basket
* Treasuries rebound; oil up in choppy trade
(Recasts, updates with markets' close)
By Barani Krishnan
NEW YORK, April 1 (Reuters) - U.S. blue chips surged to an
early 3-year high on Friday as encouraging jobs growth kicked
the second quarter off to a strong start for world stocks,
even as a Fed official's cautious views on the economy hurt the
dollar.
Wall Street's Dow Jones industrial average <> hit its
highest level since June 2008 after the government reported a
second straight month of robust job gains in March.
Oil closed at peaks not seen since the third quarter of
2008, while gold slipped as investors' appetite for risk grew.
But U.S. Treasuries rose after New York Federal Reserve
Bank President William Dudley said recovery in the economy and
labor market still lagged the central bank's expectations, and
interest rates were unlikely to rise so soon, as some in the
market feared.
The Labor Department said a total of 216,000 nonfarm jobs
were added in March, well above the 190,000 expected in a
Reuters poll. It also said revised January and February figures
showed more jobs than previously reported. The unemployment
rate for March fell to a two-year low of 8.8 percent. For
details, see []
JOB NUMBERS WIDELY CHEERED
Notwithstanding Dudley's comments, the job numbers were
widely cheered by the market.
"We are growing, we are getting more profitable, we are
going to see more jobs. That means consumers are going to do
better. That is the better picture to look at," said Marc Pado,
U.S. market strategist at Cantor Fitzgerald & Co in San
Francisco.
The Dow closed up 56.99 points, or 0.46 percent, at
12,376.72.
The Standard & Poor's 500 Index <.SPX> rose 6.56 points, or
0.49 percent, to 1,332.39. The S&P 500 managed to push through
a technical level it has been unable to sustain in the past,
but it may need help to break to new multiyear
highs.
The technology-laced Nasdaq Composite Index <> added
up 8.53 points, or 0.31 percent, at 2,789.60.
Global stocks, as measured by the MSCI All-Country World
Index <.MIWD00000PUS>, rose 0.7 percent.
The dollar fell against the euro and a broad basket of
currencies after Dudley, one of the Fed's key policymakers,
signaled further support for the economy.
Markets have been getting mixed signals from various Fed
officials over the past two weeks on growth and whether the
central bank is keen to keep the easy monetary policy it
maintained since the financial crisis or is looking to raise
interest rates.
Dudley said he saw no reason yet to reverse course.
"I would be surprised if we didn't finish the full QE2," he
said, referring to the central bank's $600 billion stimulus
program, which some other Fed officials have indicated could be
ended prematurely.
"If they indicated they were going to continue with QE2,
then that is a lot of the market," said Terry Morris, senior
equity manager for National Penn Investors Trust Company in
Reading, Pennsylvania. "A lot of good news, a lot of momentum
and the Fed is accommodative."
ECB RATE HIKE FEAR HURTS DOLLAR
Another factor that hurt the dollar was growing belief that
the European Central Bank will be the first central bank to
raise interest rates at a policy meeting next Thursday.
The euro rose 0.5 percent to $1.4231 <EUR=>, well off a
$1.4059 low. Traders said stop-loss orders around $1.4060 led
to some euro buying.
The single currency has risen some 6 percent in 27 days --
from a low of $1.3428 on Feb. 14 to $1.4249 last week, the 2011
high. Traders said a break of that level could prompt a run at
$1.4283, the Nov. 4 peak.
The U.S. Dollar Index <.DXY>, which pits the greenback
against a basket of major currencies, was off 0.02 percent at
75.842.
OIL, TREASURIES UP; GOLD DOWN
London Brent crude futures for May <LCOK1> finished up
$1.34 at $118 a barrel. U.S. crude <CLc1> settled up $1.22, or
1.14 percent, at $107.94 a barrel, its highest close since
September 2008.
U.S. Treasuries erased early losses almost entirely on
Dudley's remarks.
The benchmark 10-year U.S. Treasury note <US10YT=RR> was up
4/32 in price for the day, yielding 3.46 percent after being
down 10/32 right after the bullish March employment report.
U.S. federal fund futures were slightly lower, with the January
2012 <FFF2> contract down 0.01 percent at 99.6600.
Safe-haven gold slipped as the jobs data increased
investors' risk appetite. Spot gold <XAU=> , which tracks
trades in bullion, dropped 0.1 percent to trade above $1,428 an
ounce, off its low at $1,412.55 hit earlier in the session.
U.S. gold futures for June delivery <GCM1> finished down 0.7
percent at $1,428.10 an ounce.
(To read Reuters Global Investing Blog click on
http://blogs.reuters.com/globalinvesting; for the MacroScope
Blog click on http://blogs.reuters.com/macroscope; for Hedge
Fund Blog click on http://blogs.reuters.com/hedgehub)
(Additional reporting by Chuck Mikolajczak, Julie Haviv, Ellen
Freilich, Robert Gibbons and Frank Tang; Editing by Dan
Grebler)
