GLOBAL MARKETS-Stocks, oil rise amid hopes of recovery

* Wall Street rallies on banking shares, U.S. jobs data

* Dollar index hits 6-week low as risk appetite increases

* Oil gains on rising expectations of economic recovery

* Bonds rise on lingering worries over post-payrolls data (Updates with U.S. market activity; changes dateline, previous LONDON)

By Herbert Lash

NEW YORK, May 8 (Reuters) - Global stocks and oil prices rose on Friday after U.S. jobs data and long-awaited stress tests on U.S. banks were better than expected, bolstering rising hopes of an improving American economy.

The dollar slumped against the yen and the euro, which surged to a one-month high above $1.35, as the labor market news dried up safe-haven flows into the U.S. currency.

Oil retreated from session highs to below $58 a barrel, but stayed within reach of six-month highs after data showed U.S. employers cut 539,000 jobs in April -- below the March tally of 663,000 job losses and consensus expectations of 590,000.

Although the data showed a smaller-than-expected drop in U.S. payrolls, the news failed to dispel the likelihood of heavy job losses in the months ahead, leading Treasury debt prices to rise.