GLOBAL MARKETS-U.S. jobs gain, lifting Wall Street futures and dollar

May 8, 2015 12:19 PM

By Anirban Nag

LONDON, May 8 (Reuters) - A rebound in U.S. jobs numbers lifted U.S. stock futures, boosted the dollar against the euro and helped European shares consolidate their biggest daily gain since January on Friday.

Nonfarm payrolls increased by 223,000, just below the 224,000 that economists polled by Reuters had expected. The unemployment rate dropped to 5.4 percent in April, near a seven-year low, indicating a pickup in growth that may lead the Federal Reserve to raise interest rates this year.

U.S. short-term interest-rate futures contracts rose. They now indicate traders see a 51 percent chance the first Fed rate hike will come in December 2015, based on CME FedWatch, which tracks rate expectations using its Fed funds futures contracts.

"This is more evidence that the economy is expanding after its first-quarter swoon," said Jim McDonald, chief investment strategist at Chicago-based Northern Trust Asset Management.

"Last month was an anomaly. I think we'll continue to see jobs over 200,000. This is the kind of growth we expect throughout the year."

Markets cheered the rebound. Wall Street futures extending gains to 0.7 percent from 0.2 percent beforehand. The pan-European FTSEurofirst jumped more than 2 percent, building on earlier gains as Britain's FTSE rose after national elections.

The jobs data are seen as key factors in a Fed interest rate decision. Still, the initial March data was revised lower, leading to some caution. U.S. Treasury yields dipped.

"The downwards revision to the March payrolls number and the lack of earnings growth are some areas of slight concern," said Hantec Markets analyst Richard Perry.

Benchmark U.S. Tresury yields dipped to 2.14 percent while the dollar was flat against a basket of top currencies. German Bund futures rose after the data. They last traded 24 ticks up on the day at 154.24. (Additional reporting by Marc Jones and Sudip Kar-Gupta in London Editing by Larry King)