GLOBAL MARKETS-Global stocks and euro surge ahead of U.S. jobs data

* European rally resumes
* Euro hits 3-month peak
* Best weekly gains in 9 yrs for Asia and EM stocks
* U.S. unemployment report in view
* Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E

By Tom Arnold and Swati Pandey
LONDON/SYDNEY, June 5 (Reuters) - World stocks held their
ground near three-month highs as the euro hit its highest level
since March 10, thanks to Europe's stimulus boost, fuelling
hopes for a global rebound.
Investors are pricing in an economic recovery despite data
showing the severe damage wrought by coronavirus lockdowns.
Later in the day, U.S. nonfarm payrolls figures are expected to
show further deterioration in the country's jobs market.
Led by a jump in banks, insurers, vehicle manufacturers and
travel, the pan-European STOXX 600 .STOXX jumped 1.3%, still
enjoying a boost from the European Central Bank's pledge to
supply extra cash to its Pandemic emergency purchase programme
(PEPP). The STOXX 600 is about 15% below all-time highs, but has
recovered more than 37% from March lows. MSCI's broadest index of Asia-Pacific shares outside of
Japan .MIAPJ0000PUS rose 0.7%, reversing early losses to stay
near a 12-week top.
The index is up about 7.4% this week, on track for its best
weekly showing since December 2011.
With investors tentatively in risk-on mode, emerging market
stocks .MSCIEF were up 0.6% on the day and on course for their
best week since December 2011.
"The European Central Bank decision was better then expected
in terms of liquidity," said Francois Savary, chief investment
officer at Swiss wealth manager Prime Partners. "The market has
been driven by the sentiment that everything is going well and a
recovery is in sight for the second half of the year. But the
big question is is the market ahead of fundamentals? There's
room for consolidation."
E-mini futures for the S&P 500 EScv1 rose 1%.
Analysts cautioned about the heady levels, with equity
valuations at their highest since the dot.com boom in 2000,
according to Matthew Sherwood, investment strategist for
Perpetual.
World equity markets were thrashed in March when they hit
"bear territory" on fears the COVID-19 driven lockdowns would
push the global economy into a long and deep recession.
Market sentiment has since been bolstered by central bank
stimulus.
However Bob Michele, chief investment officer and head of
the global fixed income, currency & commodities group at
J.P.Morgan Asset Management, warned the massive quantitative
easing would distort pricing and mute traditional signals from
bond markets on growth and inflation, advocating "co-investing"
alongside central banks.
Investor attention is now focused on Friday's U.S.
employment report, which is expected to show nonfarm payrolls
fell in May by 8 million jobs after a record 20.54 million
plunge in April. The U.S. unemployment rate is forecast to rocket to 19.8%, a
post-World War Two record, from 14.7% in April.
Currency markets continued to show confidence in the
expected revival of the global economy.
Set for a third straight week of gains, the euro rose to
$1.1380 EUR= , its highest level since March 10 and was on
course for a weekly jump of 2.5% and a ninth straight day of
gains, its longest series of rises on record since Oct 2004.
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The dollar index =USD is on track for its third
consecutive week of losses at 96.611, close to its lowest in
nearly three months.
All eyes will next be on the U.S. Federal Reserve, which
holds its regular two-day policy meeting next week.
The Australian dollar AUD=D3 rose 0.8% to $0.6999, briefly
rising above $0.70 for the first time since early January.
German government bond yields DE10YT=RR hit their highest
levels in months, while Italian and other low-rated Southern
European borrowing costs dropped further after the ECB's hefty
support effort.
In commodities, U.S. crude CLc1 gained 1.4% to $37.92 per
barrel and Brent LCOc1 added 0.8% to $40.76, with benchmarks
on track for a sixth week of gains, thanks to output cuts amid
signs of improving fuel demand. O/R
Spot gold XAU= was down 0.2% at $1,708.07 per ounce, set
for a third consecutive weekly decline as economic recovery
hopes fuelled demand for riskier assets. GOL/

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Global assets http://tmsnrt.rs/2jvdmXl
Global currencies vs. dollar http://tmsnrt.rs/2egbfVh
Emerging markets http://tmsnrt.rs/2ihRugV
MSCI All Country Wolrd Index Market Cap http://tmsnrt.rs/2EmTD6j
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(Editing by Nick Macfie)