LONDON, Jan 6 (Reuters) - Stocks rose and the dollar quickly turned higher after an initial wobble following U.S. jobs data on Friday, a stronger than expected increase in earnings made up for a weaker-than-forecast payrolls figure.
U.S. employment increased less than expected in December but a rebound in wages pointed to sustained labor market momentum that sets up the economy for stronger growth and further interest rate increases from the Federal Reserve this year.
The dollar index briefly fell following the miss in payrolls, but quickly recovered. It was last up 0.4 percent for the day.
The dollar rose to a session high against the yen of 116.42 yen, and also hit a high for the day against the euro following the data.
U.S. interest rate futures pared gains and some contracts turned lower following the stronger-than-forecast rise in average hourly earnings.
“The non-farm payroll and jobs report numbers have shown a slightly weaker number, but the overall employment picture in the US has improved in December,” James Hughes, chief market analyst at brokerage GKFX, said in a note.
“Despite the miss in the headline grabbing non farm payroll number, the overall jobs report can be considered a strong one with the all-important average earnings jumping from a negative reading last month of -0.1 percent to 0.4 percent this month.”
Wall Street futures trimmed losses and turned higher after the data, while the pan-European STOXX 600 rose from session lows touched just before the data was released. The index remained down 0.2 percent on the day.
Sterling hit a day’s low against the dollar after the data. British government bond futures spiked after the data and then plummeted around 25 ticks. They were last down 19 ticks on the day at 124.76. Benchmark gilt yields hit session highs across the range of maturities.
Gold briefly rallied, but turned lower and was last down 0.4 percent, near levels seen prior to the data.
Editing by Jeremy Gaunt