* U.S. job growth slows in August; wage growth retreats
* Yields rise on strong manufacturing data
* Results boost European shares
* Oil falls after Harvey floods some U.S. refineries (Updates with U.S. markets; changes byline, dateline, previous LONDON)
By Saqib Iqbal Ahmed
NEW YORK, Sept 1 (Reuters) - Wall Street stocks rose on Friday, boosting an index of global equity markets close to a record high, after data showed U.S. job growth slowed more than expected in August, which could make the Federal Reserve cautious about raising interest rates again this year.
Traders in currency and bond markets, however, viewed the data as not soft enough to completely rule out another rate hike by the U.S. central bank this year. The dollar climbed and Treasury yields rose.
Headline jobs growth slowed after two straight months of strong gains, while average hourly earnings rose three cents, or 0.1 percent, versus forecasts of 0.2 percent.
“This would give the Fed pause when they meet about raising rates, but this report won’t delay on balance sheet normalization later this month,” said Kristina Hooper, Global Market Strategist at Invesco, in New York.
MSCI’s world index, which tracks shares in 46 countries, was up 0.36 percent, less than 1 percent shy of a record high.
Global stocks managed to claw back from early-month declines to finish August with a fractional gain of 0.17 percent, according to MSCI’s All World Index.
The U.S. benchmark S&P 500 stock index scratched out an advance of 0.06 percent. Nonetheless, August was the poorest showing for U.S. equities since March and for global stocks since last October, the month before the election of Donald Trump as U.S. president.
On Friday, U.S. stocks opened higher and all three major indexes were on track to post gains for a second straight week.
The Dow Jones Industrial Average rose 40.24 points, or 0.18 percent, to 21,988.34, the S&P 500 gained 4.47 points, or 0.18 percent, to 2,476.12 and the Nasdaq Composite added 2.95 points, or 0.05 percent, to 6,431.62.
European shares started September on a firm footing after three months of losses, as financials rose. The pan-European STOXX 600 index was up 0.6 percent.
In the bond market, Treasury yields initially fell after the release of the employment report on what traders said was a data provider’s figures erroneously showing a downward revision in July wage growth.
After it became clear there was no such revision, yields turned higher.
Yields also rose as strong manufacturing data boosted sentiment that economic growth is solid. The Institute for Supply Management said its index for factory activity soared to 58.8 in August, the highest since April 2011.
Benchmark 10-year U.S. Treasury note yields fell as low as 2.10 percent after the jobs report before rising to trade up on the day at 2.14 percent.
Treasuries are coming off their strongest month since June 2016, having delivered a total return of 1.13 percent in August, according to Bank of America/Merrill Lynch Fixed Income Index data.
That outperformed most other classes of bonds as Merrill’s Corporate, Government & Mortgage Index returned just 0.94 percent.
The dollar index, which measures the greenback against a basket of six major rivals, was up 0.03 percent to 92.693, after having fallen as low as 92.1.
“The (Fed) rate hike is still sort of a question mark, but (Friday’s jobs data) wasn’t that big a miss to take it totally off the table for the rest of the year,” said Alfonso Esparza, senior currency analyst at Oanda in Toronto.
Oil prices slipped in the wake of Hurricane Harvey, which has killed more than 40 people and brought record flooding to the oil heartland of Texas, paralysing a quarter of the U.S. refining industry.
Brent oil, was down 0.17 percent to $52.77 a barrel. U.S. crude was down 0.23 percent to $47.12.
Spot gold was up 0.12 percent at $1,323.22 an ounce.
Reporting by Saqib Iqbal Ahmed; Additional reporting by Karen Brettell, Richard Leong, Dan Burns and Sam Forgione in New York and Sruthi Shankar and Tanya Agrawal in Bengaluru; Editing by James Dalgleish