A tepid jobs report that could help the Federal Reserve hold off on further interest rate hikes on Friday boosted equities and pulled the rug out from under the dollar.
The United States added 187,000 jobs last month, below the 200,000 expected by analysts but roughly steady with revised June figures.
The figure adds to encouraging signs that the Fed's aggressive interest rate hikes to ease demand may bring down inflation without triggering a major recession, and may favour a decision to hold rates steady at the next policy meeting in September.
"A mixed US jobs report appears to have stabilised sentiment... after another slowdown in jobs growth in July and downward revisions to previous months, spoke to the idea that central bank rate hikes have done their job, and that no more are coming," said CMC Markets analyst Michael Hewson.
But the jobless rate came in at 3.5 percent, a touch below June's 3.6 percent figure and at a historically low level.
And average hourly earnings rose 0.4 percent in July, the same pace as the month before but higher than expectations.
"The key takeaway from the report is that labor supply continues to be tight, which could make it difficult to achieve a more Fed-pleasing moderation in wage growth," said Briefing.com analyst Patrick O'Hare.
"That might not translate into another increase in the target range for the fed funds rate, but it does fit the notion that the Fed will be inclined to keep the policy rate higher for longer," he added.
Wall Street's main indices pushed higher, with the Dow adding 0.6 percent in late morning trading. The broader S&P 500 also rose 0.6 percent and the tech-heavy Nasdaq climbed 0.7 percent.
Europe's main equity markets ended the day higher.
Meanwhile the dollar fell against its major rivals after the US jobs numbers were announced, an indication that currency traders may expect a pause in interest rate hikes by the Fed.
Equities had slid midweek after Fitch stripped the United States of its top credit rating, making it more expensive for the country to borrow.
That saw investors switch to haven assets such as the dollar, yen and government bonds.
Positive earnings also helped to offset debt concerns in the world's biggest economy.
"(Stock) markets have started to stabilise after a chaotic week led by the US debt downgrade and further interest rate hikes in the UK", noted Dan Coatsworth, analyst at AJ Bell.
"Amazon's better-than-expected second quarter results have put investors in a better mood."
Shares in Amazon rose 10.7 percent.
Elsewhere on the corporate front, Apple reported earnings that topped market expectations. But it also warned about falling sales, and its shares fell 3.2 percent.
However shares in British advertising group WPP slumped seven percent on Friday after a profit warning. It came amid lower spending by US tech clients as they slash costs.
"Plus the world's second largest economy, China, has also experienced a bumpier-than-expected recovery out of Covid this year, which has been another headwind for the advertising giant," said Victoria Scholar, head of investment at Interactive Investor.
WPP shares fell 3.6 percent.
Oil prices rose on Friday after Saudi Arabia extended by a month a cut in production and OPEC+ nations also signalled their intention to maintain their policy of restraining output.
- Key figures around 1530 GMT -
New York - Dow: UP 0.6 percent at 35,407.98 points
London - FTSE 100: UP 0.5 percent at 7,564.37 (close)
Frankfurt - DAX: UP 0.4 percent at 15,951.86 (close)
Paris - CAC 40: UP 0.8 percent at 7,315.07 (close)
EURO STOXX 50: UP 0.7 percent at 4,332.91 (close)
Tokyo - Nikkei 225: UP 0.1 percent at 32,192.75 (close)
Hong Kong - Hang Seng Index: UP 0.6 percent at 19,539.46 (close)
Shanghai - Composite: UP 0.2 percent at 3,288.08 (close)
Euro/dollar: UP at $1.1038 from $1.0952 on Thursday
Pound/dollar: UP at $1.2768 from $1.2710
Euro/pound: UP at 86.44 from 86.14 pence
Dollar/yen: DOWN at 141.82 yen from 142.52 yen
Brent North Sea crude: UP 0.9 percent at $85.89 per barrel
West Texas Intermediate: UP 0.9 percent at $82.31 per barrel
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