After an initial sag to digest hotter than forecast US employment data, Wall Street joined major European indices in positive territory Friday despite fears a bullish jobs market will likely keep interest rates higher for longer.
The latest non-farm payroll report showed the US economy added 336,000 new jobs last month, virtually double what was expected.
The Labor Department also revealed US unemployment stayed unchanged at 3.8 percent, maintaining pressure on policymakers looking to cool the economy.
On the plus side for analysts, who now put the prospect of a rate hike before year-end at 50 percent, wage growth fell back slightly.
The jobs news caused the Dow to give up around half of one percent minutes after the opening bell, while tech-heavy NASDAQ and the broader S&P 500 both shed around 0.7 percent.
However, by mid-session the Dow had marched ahead 0.9 percent, with the S&P 500 500 matching that and the NASDAQ adding 1.2 percent.
"All told, today's jobs report was strong, and the market's initial reaction makes total sense," said Fawad Razaqzada, analyst at StoneX.
"What is not known, however, is the inevitable revisions we will see next month," which traders were clearly mulling over as the session developed.
The data were "underscoring the Fed's view to keep policy restrictive for longer and raising the possibility for one more rate increase in 2023, slightly", Razaqzada added.
For Stephen Innes at SPI Asset Management, "at least on the surface, this staggeringly strong NFP beat could be considered unfriendly to risk and will likely continue to exert upward pressure on the dollar".
Innes further warned that "the road to a risk-friendly soft landing has always been narrow".
- US bond yields on a high -
The dollar initially received a fillip from the jobs news, having struggled Friday before the release of the key data before slipping off day highs.
Major European indices spent the day in the green, paring early gains after the US data emerged but then finding a second wind as London gained 0.6 percent, Frankfurt closed with a 1.1 percent gain and Paris added 0.9 percent.
Oil prices recovered slightly from sharp falls over the past week that eased concerns over high inflation.
At the same time, US bond yields hit their highest levels since 2007 this week as investors fear the fallout of high borrowing costs for businesses and consumers.
The Fed has raised its key lending rate 11 times since March 2022, lifting borrowing costs to a 22-year high as it looks to bring inflation down to its long-term target of two percent.
Despite falling sharply over the last 12 months, US inflation remains stubbornly above target, leading most Fed officials to predict that another hike will be needed before year end.
In Europe on Friday, data showed factory orders rose more than expected in its biggest economy Germany during August.
High inflation, elevated energy costs and weaker demand from key market China have all been weighing on Germany's crucial manufacturing sector in recent months.
The country entered recession at the start of 2023, and economic growth stagnated in the second quarter. A slew of weak indicators since then added to fears of a prolonged slowdown.
Elsewhere Friday, the ruble fell further against the dollar, a day after Russian President Vladimir Putin said the sanctions-hit country's economic situation was "stable".
And the Food and Agriculture Organization said global sugar prices had soared to their highest level in almost 13 years in September as the El Nino weather phenomenon hit production in India and Thailand.
- Key figures around 1645 GMT -
New York - Dow: UP 0.9 percent at 33,413.41 points
London - FTSE 100: UP 0.6 percent at 7,494.58 points (close)
Frankfurt - DAX: UP 1.0 percent at 15,229.77 (close)
Paris - CAC 40: UP 0.9 percent at 7,060.15 (close)
EURO STOXX 50: UP 1.1 percent at 4,144.36
Tokyo - Nikkei 225: DOWN 0.3 percent at 30,994.67 (close)
Hong Kong - Hang Seng Index: UP 1.6 percent at 17,485.98 (close)
Shanghai - Composite: Closed for a holiday
Euro/dollar: UP at $1.0598 from $1.0534 on Thursday
Pound/dollar: UP at $1.2256 from $1.2168
Dollar/yen: UP at 149.07 yen from 148.97 yen
Euro/pound: DOWN at 86.46 pence from 86.57 pence
Brent North Sea crude: UP 0.3 percent at $84.33 per barrel
West Texas Intermediate: UP 0.3 percent at $82.52 per barrel
burs/bcp/cw/jj
