(Adds U.S. market open, byline, dateline; previous LONDON)
* Dollar at 7-month low on weaker-than-expected data
* World stocks gain for 7 weeks, longest streak since 2010
* Oil slides as U.S. climate pact exit compounds glut fears
* Germany's DAX, UK's FTSE at record highs
By Herbert Lash
NEW YORK, June 2 (Reuters) - The U.S. dollar fell to seven-month lows on Friday after data showed the U.S. economy created fewer jobs than expected in May but Wall Street equities shrugged off the news to hit new highs and an index of global equity markets also set a record.
U.S. job growth slowed last month and employment gains in the prior two months were not as strong as previously reported, suggesting the labor market was losing momentum despite the unemployment rate falling to a 16-year low of 4.3 percent.
The lackluster job growth data lifted gold prices to a near six-week peak as the report lowered expectations for the Federal Reserve to raise interest rates later this year after a hike that most analysts still anticipate later in June.
Nonfarm payrolls increased 138,000 in May as the government, manufacturing and retail sectors lost jobs, the Labor Department said. The U.S. economy created 66,000 fewer jobs than previously reported in March and April.
Still, investors continue to give both the economy and President Donald Trump's administration the benefit of the doubt, said Michael Arone, chief investment strategist at State Street Global Advisors in Boston.
"Should we see the earnings begin to decline, I do think the market will have trouble," Arone said.
"The rest is kind of this noise, the monetary policy, what's going on in DC," he said, referring to Washington.
MSCI's all-country world stock index hit a new record, gaining 0.5 percent, as did British shares as financial stocks lifted the FTSE 100 index of top UK blue chips before paring gains. Germany's DAX index also set new highs.
The MSCI index was on track to post a seventh straight week of gains, its longest winning streak since 2010.
On Wall Street, the three major U.S. indices set intraday highs. The Dow Jones Industrial Average rose 30.79 points, or 0.15 percent, to 21,174.97. The S&P 500 gained 3 points, or 0.12 percent, to 2,433.06 and the Nasdaq Composite added 30.10 points, or 0.48 percent, to 6,276.93.
The greenback fell to seven-month troughs against euro and Swiss franc, while sliding from a one-week high versus the yen.
Analysts said the less rosy jobs data was unlikely to derail the Fed from raising interest rates this month.
"A hike in June is still on the table but the news flow will have to improve for the Fed to keep tightening in the second part of the year," said Thomas Julien, U.S. economist, at Natixis North America in New York.
The dollar index, tracking the unit against key foreign currencies, fell to a seven-month low and was last down 0.49 percent at 96.721
The euro was 0.59 percent higher against the dollar to $1.1277. Against the yen, the dollar fell from one-week highs and last changed hands at 110.34 yen, down 0.90 percent.
Brent crude tumbled below $50 and headed for a second week of losses on worries Trump's decision to abandon a climate pact could spur U.S. crude drilling and worsen a global glut.
Benchmark Brent crude futures were off 91 cents at $49.72 a barrel. U.S. West Texas Intermediate crude futures fell 87 cents to $47.49 per barrel.
Long-dated U.S. Treasury yields fell to nearly seven-month lows while short-dated yields touched their lowest in more than two weeks after the U.S. employment data suggested a cautious Fed policy beyond June.
U.S. 10-year Treasuries rose 19/32 in price to push their yields down to 2.1487 percent.
Reporting by Vikram Subhedar; Editing by Bernadette Baum