(Updates to open of U.S. trading, changes dateline to NEW YORK; previous LONDON)
By David Randall
NEW YORK, Nov 2 (Reuters) - World equity markets rallied on Friday with emerging market stocks seeing their best day since 2016 on hopes the United States and China were mending trade relations, while strong U.S. wage growth boosted bond yields.
The signals on trade triggered a global surge in risk appetite that lifted metals and swathes of trade-sensitive currencies and bond markets. A buoyant Asian session, where most of the major markets gained between 2.5 and 4 percent, put emerging market stocks up 3 percent.
“When (U.S. President Donald) Trump wants to bump the market ahead of the mid-terms, the market likes it,” said Saxo Bank’s head of FX strategy, John Hardy, referring to next week’s mid-term U.S. elections.
In Europe, Germany’s export-heavy DAX jumped 1.5 percent in its best session since July.
The pan-European STOXX 600 index rose 0.78 percent, while MSCI’s gauge of stocks across the globe gained 0.76 percent.
U.S. job growth rebounded sharply in October and wages recorded their largest annual gain in 9-1/2 years, pointing to further labor market tightening that could encourage the Federal Reserve to raise interest rates again in December.
The Dow Industrials and the benchmark S&P 500 stock index rose for a fourth day on strong earnings and optimism over the trade dispute, but Apple’s share slide after a disappointing forecast pulled the Nasdaq lower.
The Dow Jones Industrial Average rose 91.98 points, or 0.36 percent, to 25,472.72, the S&P 500 gained 3.62 points, or 0.13 percent, to 2,743.99 and the Nasdaq Composite dropped 38.99 points, or 0.52 percent, to 7,395.07.
Apple’s shares dropped 6.8 percent, taking its market value below $1 trillion, after the iPhone maker warned sales for the crucial holiday quarter would likely miss expectations.
Benchmark 10-year notes last fell 9/32 in price to yield 3.176 percent, from 3.144 percent late on Thursday.
The dollar index, tracking the greenback against six major currencies, fell 0.03 percent, with the euro up 0.09 percent to $1.1417.
In commodity markets, industrial metals led the charge on the hopes a Trump-Xi trade deal would prevent China’s resource-hungry economy faltering.
Oil prices were weighed down by a report that the U.S. government has agreed to let eight countries, including close allies South Korea and Japan, as well as India, keep buying Iranian oil after Washington re-imposes sanctions.
U.S. crude fell 0.58 percent to $63.32 per barrel and Brent was last at $72.78, down 0.15 percent on the day.
Reporting by David Randall; Editing by Bernadette Baum