GLOBAL MARKETS-World stocks, oil rally on U.S. jobs data

* Risk assets climb on better-than-expected labor report

* U.S. labor data suggest U.S. on brink of creating jobs

* Dollar-commodities link broken by encouraging jobs data

* Bond prices fall as jobs data erodes safe-haven appeal (Updates with close of U.S. markets)

By Herbert Lash

NEW YORK, March 5 (Reuters) - World equities and oil jumped on Friday on signs of revived consumer spending and after fears a stormy February would worsen the U.S. jobs picture proved false, boosting sentiment about the pivotal labor market.

Sentiment also was buoyed after European leaders expressed confidence that new austerity measures planned by Greece would be enough to pull the country out of its debt crisis and make any bailout unnecessary. For details see: [ID:nLDE6240M8]

Stocks added to gains in late trading after the Federal Reserve released data showing total U.S. consumer credit rose $4.96 billion in January, the first rise in a year and the largest for any month since mid-2008. [ID:nN05250819]

The Nasdaq closed at an 18-month high, capping a worldwide equity rally that pushed a key European index to its biggest weekly advance in nearly eight months and all three major U.S. indexes to end the week in positive territory for 2010.

The renewed optimism encouraged investors to buy risk assets such as stocks, while lifting both commodities and the dollar as investors bet a growing economy would boost interest rates and demand for raw materials. [ID:nN05151726]

"It was a risk appetite event," said Michael Woolfolk, senior currency strategist at BNY Mellon in New York. "The fact that the U.S. labor market is in better shape than we were thinking supports the U.S. recovery story and it encourages market participants to put on risky trades."

The dollar rose to as high as 90.58 yen, its strongest level against the Japanese currency in more than a week, and crude oil hit a seven-week high above $82 a barrel before paring some gains.

Those price moves were in contrast to a recent trend in which commodity prices have risen when the dollar is weaker; a weaker dollar makes dollar-denominated purchases cheaper for holders of other currencies.

U.S. Treasury prices, meanwhile, fell on news that U.S. non-farm payrolls cut only 36,000 jobs and unemployment was unchanged at 9.7 percent, indicating heavy snowstorms across much of the United States last month barely harmed employment.

Analysts polled by Reuters expected 50,000 job cuts and a 9.8 percent jobless rate. [ID:nN04252324]

"This was the number people were fearing, and that we got through it like this is very positive for the long run," said Marc Pado, market strategist at Cantor Fitzgerald & Co in San Francisco.

Shares of Apple Inc rose almost 4 percent to hit both intraday and closing all-time highs after announcing its much hyped iPad computer would arrive in U.S. stores in April.

The Dow Jones industrial average <.DJI> closed up 122.06 points, or 1.17 percent, at 10,566.20. The Standard & Poor's 500 Index <.SPX> climbed 15.73 points, or 1.40 percent, at 1,138.70. The Nasdaq Composite Index <.IXIC> gained 34.04 points, or 1.48 percent, at 2,326.35.

The MSCI world equity index <.MIWD00000PUS> gained 1.4 percent.

The euro was up 0.31 percent at $1.3621, and against the yen, the dollar was up 1.38 percent at 90.30.

The dollar fell against a basket of major currencies, with the U.S. Dollar Index <.DXY> down 0.13 percent at 80.453.

U.S. Treasuries fell sharply in their worst sell-off in nearly a month after the U.S. jobs data fueled economic recovery hopes and worries over Federal Reserve interest rate hikes. Debt securities tend to fare better during weak economic times.

"Treasury investors, connecting the dots, are saying if unemployment is coming back faster than people had expected that ultimately is going to cause the Fed to tighten monetary policy a little bit faster than they had expected," said David Dietze, chief investment strategist at Point View Financial Services, in Summit, New Jersey. "And rising interest rates are not good for Treasuries."

The benchmark 10-year U.S. Treasury note was down 21/32 in price to yield 3.68 percent.

U.S. crude for April gained $1.29 to settle at $81.50, the highest settlement since Jan. 11. Brent crude for April advanced $1.35 to settle at $79.89 a barrel.

Spot gold prices rose 5 cents, paring earlier gains, to trade at $1,131.60 an ounce. (Reporting by Edward Krudy, Chris Reese, Steven C. Johnson and Barani Krishnan in New York; writing by Herbert Lash; Editing by Leslie Adler)