GLOBAL MARKETS-Dollar, stocks rise as U.S. jobs beat forecast

* U.S. stocks rise after payrolls; MSCI (NYSE: MSCI - news) global index edges up

* Brent, U.S. oil down; gold slides after jobs data

* U.S. 2-year Treasuries yield hits highest since May 2011 (Updates to U.S. midday, adds European stocks close)

By Caroline Valetkevitch

NEW YORK, Dec 5 (Reuters) - A surprisingly strong U.S. jobs report lifted the dollar to a five-and-a-half year high against a basket of currencies on Friday, while stocks climbed, led by financial shares.

U.S. bond prices dropped, with the yield on U.S. 2-year Treasuries hitting the highest since May 2011, as investors priced in a U.S. interest rate hike by mid-2015.

The Labor Department data showed U.S. employers hired more workers in November than during any month in nearly three years. Non-farm payrolls surged by 321,000 last month, the most since January of 2012 and above forecasts for 230,000 new jobs. The unemployment rate held at a six-year low of 5.8 percent.

"It is unequivocally bullish on the U.S. economy," said Anthony Valeri, fixed-income strategist at LPL Financial (NasdaqGS: LPLA - news) in San Diego. "We'll need more evidence, but it definitely contradicts the low-yield environment we have been in."

U.S. short-term interest-rate futures contracts dropped as traders bet the Federal Reserve would raise interest rates in July 2015 - earlier than formerly thought.

The robust U.S. report caused the yield on U.S. 2-year Treasuries to rise nearly 9 basis points. The yield curve also flattened, with the differential between the five-year note and the 30-year bond falling to its lowest since January 2009.

The benchmark 10-year U.S. Treasury note as down 20/32, the yield at 2.326 percent.

The dollar rose against a basket of currencies to its highest since March 2009. It also gained against the yen to its highest since late July 2007.

On Wall Street, the Dow Jones industrial average rose 87.11 points, or 0.49 percent, at 17,987.21. The Standard & Poor's 500 Index was up 7.10 points, or 0.34 percent, at 2,079.02. The Nasdaq Composite Index was up 19.25 points, or 0.40 percent, at 4,788.69.

Stock traders were balancing the encouraging fundamental strength in the U.S. economy with the prospect of a rate rise.

Financial shares led gains, with the S&P financial index up 1.2 percent as higher interest rates are expected to boost earnings in the sector. Utilities, a dividend play, lost ground as Treasuries yields rose. The S&P utility index was down 1.1 percent.

MSCI's global share index was up 0.2 percent, while an index of European shares ended up 1.8 percent as a weaker euro boosted exporters.

The rally follows heavy declines on Thursday after the European Central Bank said a decision about further stimulus would be made next year.

Gold dropped nearly 1 percent, suffering from the dollar's strength, while Brent and U.S. crude continued their slide.

Spot gold was at $1,191.05 an ounce. Brent crude was down 35 cents at $69.29 barrel, while U.S. crude oil futures were down 73 cents at $66.08. (Additional reporting by Alistair Smout in London and Michael Connor in New York; Editing by Larry King and Dan Grebler)