GLOBAL MARKETS-U.S. yields, dollar rise a touch after payroll data

By Alun John

LONDON, June 2 (Reuters) - U.S. Treasury yields and the dollar rose slightly, while share futures dipped briefly on Friday on a higher-than-expected rise in non-farm payrolls in May but investors maintained bets the Federal Reserve will skip a rate hike at its next meeting.

Also supporting the mood was the U.S. Senate passing bipartisan legislation backed by President Joe Biden that lifts the government's $31.4 trillion debt ceiling, averting what would have been a first-ever default.

Non-farm payrolls increased by 339,000 jobs last month, the Labor Department said in its closely-watched employment report on Friday, significantly ahead of the expected 190,000.

However, despite strong hiring, the unemployment rate rose to 3.7% from a 53-year low of 3.4% in April, and wage pressures are also subsiding, which should offer some comfort to Fed officials battling to bring inflation back to the U.S. central bank's 2% target.

"Hourly wages is the key and they came in just in line with what was expected," said Peter Cardillo, chief market economist, Spartan Capital Securities, in New York.

"The report, on surface, looks strong but ... it shows that wages are not exploding and they're beginning to moderate."

"In terms of the Fed, it doesn't change the prospects of the Fed skipping in June, which means they will skip and leave the door open for a rate hike at the next meeting."

Bets in futures contracts tied to the U.S. central bank's benchmark rate indicate only about a 25% chance that the Fed will deliver an 11th straight rate increase at its June 13-14 meeting, little changed from before the data, and having come down steadily earlier in the week.

These expectations were driven by remarks from several policy markers, including Fed vice chair nominee Philip Jefferson who said on Wednesday that skipping a rate hike at a coming meeting would allow rate setters to see more data before making decisions about the extent of additional policy firming.

U.S. S&P 500 futures were up 0.5% after the jobs data, though Nasdaq futures pared some of their earlier gains to be up 0.3%. NQcv1>

The U.S. benchmark 10-year Treasury yield rose 4 basis points after the news to 3.6524%, having earlier been around flat on the day, but still set for about a 16 basis point weekly fall.

The dollar was also a touch firmer, up 0.4% against the Japanese yen at 139.35 yen, and the euro was down 0.2% at $1.074.

EUROPEAN RALLY

The U.S. data did little to disrupt gains in European stock markets earlier in the day, and Europe's broad STOXX 600 index was last up 1.14% and headed for a second day of gains.

European mining stocks rose the most increasing 4.4%, boosted by a Bloomberg report China is working on new measures to support its property market.

The bullish sentiment and China property news helped push oil prices higher, with U.S. crude up 2.4% at $71.80 per barrel and Brent at $75.89, up 2.2%. Markets are also weighing the likelihood of price-supportive OPEC+ production cuts over the weekend.

Copper prices were heading for their first weekly gain since April with other metals trading higher too.

Spot gold reacted more sharply than most assets to the data, down 0.35% at 1,971 an ounce, having traded largely flat earlier in the day.

(Reporting by Alun John and Ankur Banerjee; Editing by Sriraj Kalluvila, Andrew Heavens and Emelia Sithole-Matarise)