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US labor market stronger than expected

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China says door is open for trade talks

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Japan eyes US Treasury holdings as negotiation tool

(Updates to afternoon trading)

By Stephen Culp

NEW YORK, May 2 (Reuters) - Wall Street and European

stocks surged and the dollar lost ground on Friday as investor

risk appetite was strengthened by a strong U.S. employment

report and signs China is open to tariff negotiations.

All three major U.S. stock indexes were sharply higher, with

economically sensitive financials, transports and

microchips outperforming the broader market.

All three indexes were headed for weekly gains.

The U.S. economy added more jobs than expected last month

and wage inflation came in below consensus, according to the

Labor Department, prompting a jump in benchmark U.S. Treasury

yields.

"There was really not anything not to like about the jobs

data; it indicates that the economy is doing just fine," said

Paul Nolte, senior wealth adviser and market strategist at

Murphy & Sylvest in Elmhurst, Illinois. "There are still

discussions about the impacts of tariffs, but so far at least,

that data has not shown up in a lot of the numbers."

Beijing is evaluating Washington's offer to hold talks over

U.S. President Donald Trump's crushing tariffs, China's Commerce

Ministry said, signaling a potential de-escalation of the

market-rattling trade war.

"China and the U.S. are both taking slow but repeated steps

toward negotiation and reconciliation," Jed Ellerbroek,

portfolio manager at Argent Capital Management in St. Louis. "It

seems the spiraling-out-of-control phase ended."

"The market does not believe that the current tariff rates

are going to persist for very long," Ellerbroek added.

Lack of clarity regarding U.S.-China trade duties has

contributed to a marked deterioration in U.S. businesses'

long-term outlooks, the latest round of quarterly earnings

results has shown.

Apple ( AAPL ) and Amazon.com ( AMZN ) reported quarterly

earnings late on Thursday with disappointing forecasts,

including Apple's ( AAPL ) estimated $900 million in tariff costs. The

reports took some wind from the sails of the so-called

Magnificent Seven group of artificial intelligence-related

megacap stocks, which had enjoyed a rebound this week.

General Motors ( GM ) warned of a $4 billion-$5 billion hit

to earnings and American Airlines ( AAL ) withdrew profit

forecasts.

The Dow Jones Industrial Average rose 586.76 points,

or 1.44%, to 41,339.67, the S&P 500 rose 93.31 points, or

1.67%, to 5,697.77 and the Nasdaq Composite rose 322.93

points, or 1.83%, to 18,035.16.

European shares surged, closing the book on a busy earnings

week as revived hopes of Sino-U.S. trade negotiations and solid

employment data stoked investor optimism.

MSCI's gauge of stocks across the globe

rose 14.11 points, or 1.69%, to 849.31.

The pan-European STOXX 600 index rose 1.67%, while

Europe's broad FTSEurofirst 300 index rose 36.55

points, or 1.75%.

Emerging market stocks rose 23.31 points, or

2.10%, to 1,135.28. MSCI's broadest index of Asia-Pacific shares

outside Japan closed higher by 2.4%, to 594.90,

while Japan's Nikkei rose 378.39 points, or 1.04%, to

36,830.69.

Treasury yields rose as the strong employment data led

investors to pare bets on a Federal Reserve rate cut in June.

Treasuries also came under pressure from fears of Japan

leveraging its massive U.S. debt holdings as a negotiating tool

in trade talks.

The yield on benchmark U.S. 10-year notes rose

9.7 basis points to 4.328%, from 4.231% late on Thursday.

The 30-year bond yield rose 6.5 basis points to

4.8021% from 4.737% late on Thursday.

The 2-year note yield, which typically moves in

step with interest rate expectations for the Federal Reserve,

rose 14.1 basis points to 3.843%, from 3.701% late on Thursday.

The dollar dipped in the wake of the upbeat U.S. jobs

report.

The dollar index, which measures the greenback

against a basket of currencies including the yen and the euro,

fell 0.08% to 100.06, with the euro up 0.04% at $1.1295.

Against the Japanese yen, the dollar weakened 0.25%

to 145.06.

Crude extended its slide as investors positioned themselves

ahead of an expected decision by OPEC+ to boost output.

U.S. crude fell 1.60% to settle at $58.29 per barrel,

while Brent settled at $61.29 per barrel, down 1.35% on

the day.

Gold prices reversed earlier gains and were headed for a

weekly loss amid easing trade tensions.

Spot gold fell 0.49% to $3,224.39 an ounce. U.S. gold

futures rose 0.47% to $3,225.00 an ounce.