Better-than-expected U.S. jobs data boosted world stocks and the dollar on Friday as hopes that the world's largest economy is on the mend offset the uncertainty over the conflict in Libya.
The Labor Department reported that U.S. employers added 216,000 new jobs last month, a bit better than expectations for a 190,000 increase. March's increase was the biggest since last May and encouraged hopes that the U.S recovery is gathering pace.
Further good news emerged with the 0.1 percentage drop in the unemployment rate to a near two-year low of 8.8 percent.
"The March employment report was one of the cleanest reports we have had in a while and provided a clear-cut positive view on U.S. growth," said Alan Ruskin, an analyst at Deutsche Bank.
European stocks and Wall Street futures advanced further in the aftermath of the data, while the dollar was buoyed by growing expectations that the Federal Reserve will raise interest rates sooner than anticipated.
"It is a clean, solid report, and should bring Fed rate hike expectations moderately forward," said Ruskin.
In Europe, the FTSE 100 index of leading British shares was up 1.2 percent at 5,977 while Germany's DAX rose 1.5 percent to 7,143. The CAC-40 in France was 0.9 percent higher at 4,026.
Dow futures were up 74 points at 12,326 while the broader Standard & Poor's 500 futures rose 8.3 points at 1,329.
The figures also had a notable impact in the currency markets, which trade more closely on interest rate expectations than stocks. The euro has recently been gaining ground against the dollar on widespread predictions that the European Central Bank will raise borrowing costs at its monthly policy meeting next Thursday.
By mid afternoon London time, the euro was 0.4 percent lower at $1.4105 while the dollar rose 1.1 percent to 84.24 yen.
The euro has remained fairly stable in the wake of the Irish government's latest attempt to draw a line under its massive banking sector losses. Though Thursday's stress test results showed that the sector needed an additional euro24 billion ($34 billion) in cash, there are hopes that an announced overhaul of the banks will help the financial sector recover.
Though credit ratings agency Standard & Poor's downgraded Ireland's rating by one notch to BBB+, it heaped praise on the robustness of the stress tests and said the country has better growth prospects than other indebted countries in the eurozone, such as Greece and Portugal. As a result, it said another downgrade is not imminent.
The response in stock markets to the stress test results was mixed. Shares of the two banks that are due to survive the overhaul rose Friday, while the shares of Ireland's only other publicly listed bank, Irish Life & Permanent, plunged to a record low. The latter will be broken up, with its profitable pensions and investment units facing sale in a public flotation.
Earlier in Asia, most markets advanced though Tokyo's stocks continued to be buffeted by the repercussions of the March 11 earthquake and tsunami. The Nikkei closed 0.5 percent lower at 9,708.39.
Elsewhere, Hong Kong's Hang Seng jumped 1.2 percent to 23,801.90 and South Korea's Kospi added 0.7 percent to 2,121.01.
China's Shanghai Composite Index gained 1.3 percent to 2,967.41 after a state-affiliated agency reported the country's manufacturing regained momentum in March, easing fears of a sharp slowdown. China's purchasing managers index, or PMI, rose to 53.4 last month, ending a three-month decline.
In the oil markets, the focus remained very much on Libya amid signs that forces loyal to Moammar Gadhafi are gaining ground. Their capture of another major eastern city has nearly reversed the gains rebels made since international airstrikes began over a week ago. The uncertainty has kept oil prices elevated _ Libya accounts for a little under 2 percent of global oil production.
Benchmark crude for May delivery was up 53 cents at $107.25 a barrel in electronic trading on the New York Mercantile Exchange after settling at a 30-month high of $106.72 the day before.
Pamela Sampson in Bangkok contributed to this report.