GLOBAL MARKETS-Stocks gain on U.S. jobs data, dollar weakens

* Wall St touches fresh record high after U.S. payrolls

* Dollar slips as U.S. jobs data suggests less stimulus

* Brent rises from 5-month low to above $106

* Bond yields dip after data, fears ease of early rate hike

(Adds opening of U.S. markets, byline, dateline; previous

LONDON)

By Herbert Lash

NEW YORK (Frankfurt: HX6.F - news) , April 4 (Reuters) - Steady U.S. jobs growth pushed

stocks on Wall Street to fresh highs and kept European equities

on track for a ninth day of gains Friday, while damping the

dollar's strength on the outlook that the Federal Reserve will

continue to wind down stimulus.

The U.S. labor market emerged surprisingly strong from a

severe winter, with employers hiring at a brisk pace and the

jobless rate holding near a five-year low.

Nonfarm payrolls rose by 192,000 jobs in March after rising

by 197,000 a month earlier, the Labor Department said. The

unemployment rate was unchanged at 6.7 percent even though

Americans flooded the labor market to hunt for work.

A smaller survey of households, from which the unemployment

rate is derived, showed a much bigger surge in employment. That

jump was met by a rise in the number of people entering the

labor force, a show of confidence in the U.S. job market.

The percentage of working-age Americans with a job reached

its highest level since the summer of 2009.

U.S. stocks advanced slightly, paring some initial gains

after the S&P 500 hit its latest record high, and the Nasdaq

stock market retreated.

The solid payroll report buoyed investor sentiment.

"It looks like the party goes on," said Rick Meckler,

president of hedge fund Libertyview Capital Management in Jersey

City, New Jersey.

The Dow Jones industrial average rose 32.5 points, or

0.2 percent, to 16,605.05. The S&P 500 gained 3.97

points, or 0.21 percent, to 1,892.74 and the Nasdaq Composite

dropped 16.291 points, or 0.38 percent, to 4,221.449.

The bond market surprisingly rallied, particularly five-year

notes which have been weak of late on fears the Federal Reserve

could raise interest rates earlier than anticipated. Because the

jobs data did not exceed expectations, and wage growth was still

weak, the bond market has recovered from some recent losses.

"This number doesn't give any reason to move up the Fed

timing of rate hikes, which is what was feared most," said John

Briggs, U.S. rates strategist at RBS (LSE: RBS.L - news) in Stamford, Connecticut.

The FTSEurofirst 300 index of top European shares

rose 0.6 percent to 1,353.10 points. The index touched a high

last seen in 2008, putting it on track to record nine straight

gains and three consecutive weeks of higher closes.

The dollar backed away from early gains and declined against

other major currencies despite the solid U.S. jobs gains.

The jobs report will likely encourage the Fed to continue

reducing, or tapering, its massive monetary stimulus, according

to Anthony Valeri, investment strategist at LPL Financial (NasdaqGS: LPLA - news) in San

Diego.

"It's a Goldilocks report, not too warm and not too cold,

and puts pressure on the next report in May to be good," Valeri

said. "It doesn't change the pace of tapering and shows the

economy is still on track."

The greenback was down 0.28 percent against the euro

at $1.3679 and 0.21 percent lower against the Japanese yen at

103.69 yen after hitting a session high of 104.12 yen in trading

immediately after the employment reports

The benchmark 10-year U.S. Treasury note rose

9/32 in price to yield 2.7285 percent.

Brent crude rose above $106 a barrel as expectations of a

deal to reopen vital Libyan oil ports were balanced by doubts

that a lasting resolution was imminent.

Brent crude was up 67 cents at $106.82 a barrel.

U.S. crude, or West Texas Intermediate (WTI), rose $1.16

to $100.45 a barrel.

(Additional reporting by Marc Jones in London, reporting by

Herbert Lash; Editing by Bernadette Baum)