GLOBAL MARKETS-US stocks gain on jobs data; euro jumps

* Oil falls on Chavez’s Libya mediation proposal

* World stocks rise as oil dips

* Jobless claims boost U.S. stocks

* ECB buoys euro with inflation comments
(Updates prices, US payrolls details)

By Caroline Valetkevitch

NEW YORK, March 3 (Reuters) – U.S. stocks charged higher on
Thursday, driven by upbeat U.S. labor market data and a
pullback in oil prices, while the European Central Bank
president’s warning about inflation triggered a rally in the
euro.

Data showing new U.S. claims for unemployment benefits fell
last week to their lowest level in more than 2-1/2 years was
the latest optimistic reading to bolster hopes for an upside
surprise in Friday’s key payrolls report.

ECB President Jean-Claude Trichet’s comments on
inflationary risks were widely expected, but he surprised
investors by saying the bank may raise interest rates as soon
as next month.

The heightened concerns about inflation followed months of
sharp gains in oil and other commodities.

The latest batch of purchasing managers’ indexes (PMI) in
Europe and elsewhere suggested fast-building inflationary
pressures. For details, see [ID:nLDE7220L8]

World stocks as measured by the MSCI Index (.MIWD00000PUS: Quote, Profile, Research)
rose 1.1 percent. On Wall Street, the Dow Jones industrial
average (.DJI: Quote, Profile, Research) was up 1.5 percent.

Progressively stronger U.S. economic data “has got hopes up
that we are going to see better-looking non-farm payrolls
numbers” from the U.S. Labor Department, said Scott
Marcouiller, chief technical market strategist at Wells Fargo
Advisors in St. Louis.

On Wednesday, ADP data showed U.S. private-sector employers
added more jobs than forecast last month. Also, a gauge of
employment in a report on the U.S. services sector on Thursday
rose to a near five-year high in February. [ID:nN02222564]

A Reuters survey for Friday’s February jobs report shows
nonfarm payrolls probably increased by 185,000 after snowstorms
held growth to a paltry 36,000 jobs in January. The survey was
conducted before data on Monday showed strong factory hiring,
which prompted some economists to rethink their forecasts.
[ID:nN02222564]

OIL AND GOLD SLIPS

Oil prices declined after Venezuela President Hugo Chavez
made a proposal to broker a peace deal in Libya.

Some oil analysts suggested the Chavez proposal was a
convenient excuse for traders to adjust their positions.

“If it’s coming out of Chavez, it might not have a great
degree of substance,” said Tim Riddell, head of technical
analysis at ANZ in Singapore.

“The fact that the markets have been so volatile, and
without having concrete evidence of any material shift in the
unrest in the Arab world, suggests to me that we are at best
consolidating.”

Brent crude oil (LCOc1: Quote, Profile, Research) was down $1.72 at $114.62 a barrel.
On Wednesday, crude approached 2-1/2-year highs as violence
escalated in oil producer Libya.

Investors worry if it is not halted soon, the political
instability could spread to major oil producer Saudi Arabia, a
central U.S. ally in the region, and other oil suppliers.

<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^

Global and euro zone services PMI graphic:

http://r.reuters.com/vax38r

^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^,

The euro gained against the U.S. dollar to a fresh
four-month high. It climbed as high as $1.3976 (EUR=EBS: Quote, Profile, Research) on
trading platform EBS, and was last at $1.3937, up 0.5 percent
on the day.

Gold prices fell on Trichet’s comment. Spot gold (XAU=: Quote, Profile, Research),
which hit a record high this week, dropped as low as $1,411.52
an ounce on Thursday.

Trichet said the ECB will exercise “strong vigilance” over
rising inflation. For Trichet’s comments see [ID:nLOOKCBANK].

In the U.S. stock market, the Dow Jones industrial average
(.DJI: Quote, Profile, Research) jumped 181.37 points, or 1.50 percent, at 12,248.17. The
Standard & Poor’s 500 Index (.SPX: Quote, Profile, Research) was up 19.79 points, or 1.51
percent, at 1,328.23. The Nasdaq Composite Index (.IXIC: Quote, Profile, Research)
advanced 48.69 points, or 1.77 percent, at 2,796.76.

As stocks rose on the jobless claims data, U.S. bonds fell.
The benchmark 10-year note (US10YT=RR: Quote, Profile, Research) was down 22/32, its
yield rising to 3.55 percent from 3.47 percent on Wednesday.
(Reporting and writing by Caroline Valetkevitch; Additional
reporting by Wanfeng Zhou, Ellen Freilich and Edward Krudy in
New York; Jeremy Gaunt, Caroline Copley, Neal Armstrong and
Simon Falush in London; editing by Jan Paschal and Jeffrey
Benkoe)