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

* European rally resumes
* Euro near 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 near
three-month highs and the euro also remained close to a
three-month peak, thanks to a larger than expected European
stimulus boost and on hopes of a global economic 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 rose 1.1%, still
enjoying a boost from the European Central Bank's pledge to
supply extra cash to its Pandemic emergency purchase programme
(PEPP). Europe has now clawed back two-thirds of the losses incurred
following the coronavirus outbreak and Bank of America analysts
said on Friday they expect European stocks to rise another 10%
by the end of September on expectations of a pick-up in business
activity. MSCI's broadest index of Asia-Pacific shares outside of
Japan .MIAPJ0000PUS rose 0.9%, reversing early losses to stay
near a 12-week high.
The index is up about 7.6% this week, on track for its best
weekly showing since December 2011.
Emerging market stocks .MSCIEF were up 0.7% and also on
course for their best week since December 2011.
"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," said Francois
Savary, chief investment officer at Swiss wealth manager Prime
Partners.
E-mini futures for the S&P 500 EScv1 rose 0.8%.
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 but 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.
The U.S. employment report is expected to show nonfarm
payrolls fell in May by 8 million jobs after a record 20.54
million plunge in April, while the unemployment rate is forecast
to rocket to 19.8%, a post-World War Two record, from 14.7% in
April. 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%. The dollar index =USD made a tepid recovery, rising 0.08%
to 96.84, but remained on track for its third consecutive week
of losses and close to its lowest in nearly three months.
The U.S. Federal Reserve holds its regular two-day policy
meeting next week.
The Australian dollar AUD=D3 was 0.3% higher at $0.6968,
having briefly topped $0.70 for the first time since early
January.
Long-dated German government bond yields DE30YT=RR rose
six basis points to their highest level since January. The bonds
were trading at a negative yield just 10 days ago. Italian and
other low-rated Southern European borrowing costs dropped
further after the ECB's hefty support effort.
U.S. crude oil CLc1 gained 2.4% to $38.32 per barrel and
Brent LCOc1 added 3.2% to $41.25, with the 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 $1,708.70 per ounce, set
for a third consecutive weekly decline. 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; Editing by Kirsten Donovan)