NEW YORK, Oct 7 (Reuters) - World stocks and the euro rallied on Friday after stronger-than-expected U.S. employment data eased fears of another global recession.
Hopes for a stronger policy response to the euro zone debt crisis also supported the European single currency, which rose against the dollar for the fourth consecutive session.
Prices of U.S. government bonds slid after the U.S. Labor Department said nonfarm payrolls rose by 103,000, above expectations for a 60,000 rise. Jobs gains for prior months were also revised higher. For details, see [ID:nOAT004877].
"It's a breath of fresh air and should allow the risk recovery we've had this week to continue," said Brian Dolan, chief strategist at Forex.com in New Jersey.
"All in all, it suggests a continuation of the risk recovery and that the U.S. will outperform other developed economies," he added.
Key Wall Street indexes opened higher, although the Nasdaq slipped into the red.
The Dow Jones industrial average .DJI rose 49.42 points, or 0.44 percent, to 11,172.75, while the Standard & Poor's 500 Index .SPX gained 0.46 points, or 0.04 percent, to 1,165.43. The Nasdaq Composite Index .IXIC was down 7.20 points, or 0.29 percent, at 2,499.62.
World stocks measured by the MSCI All-Country World index .MIWD00000PUS gained 1 percent.
Earlier, German data showed industry output in the European giant dropping 1 percent in August, a smaller-than-expected decline. [ID:nL5E7L711S]
The euro EUR=, which has fallen back from a 2011 peak near $1.50 in May, rose 0.26 percent to $1.3466.
Hopes of a more robust policy response to the two-year-old euro zone sovereign debt crisis rose this week after euro zone policy makers pledged to present a plan for a coordinated recapitalization of the region's banks.
Aggressive liquidity measures that the European Central Bank (ECB) unveiled on Thursday to help lenders facing straitened wholesale funding conditions further emboldened risk appetite.
Safe-haven investments such as U.S. Treasury bonds sold off as a result. Thirty-year Treasuries US30YT=RR led losses, falling more than one point in price to yield 3.018 percent.
(Additional reporting by Nick Olivari and Steven C Johnson in New York, Sebastian Tong in London; Editing by Chizu Nomiyama)
