Weak U.S. jobs data took the dollar lower and gold to a six-month high on Friday while plans by the European Central Bank to tackle the region's debt crisis continued to fuel buying in Spanish and Italian government debt.
U.S. stocks seesawed early in the session as investors weighed the chances that the Federal Reserve could launch another round of quantitative easing, pumping money into the world's biggest economy in an effort to boost growth.
Data showing U.S. nonfarm payrolls increased by 96,000 last month, well below forecasts for 125,000 new jobs, boosted speculation that the bank could act as soon as its meeting next week.
The greenback fell 1.07% to 80.175 against a basket of major currencies. The euro touched around a four-month high against the dollar of $1.2806 before more recently trading at $1.2800. The common currency rose to its highest against the Swiss franc in eight months.
"This weak employment report, in jobs, wages, hours worked and participation is probably the last piece the Fed needs before launching another round of quantitative easing next week," said Joseph Trevisani, chief market strategist at Worldwide Markets in Woodcliff Lake, New Jersey.
"QE will boost equities, damage the dollar and do little for the economy, but what else can an activist Fed do?"
Gold also jumped, with spot gold hitting $1,738.60 per ounce, its strongest since late February. U.S. gold futures also jumped to $1,742.10.
U.S. equities were mixed after closing at multi-year highs in the previous session.
The Dow Jones industrial average gained 5.11 points, or 0.04%, to 13,297.11. The Standard & Poor's 500 Index gained 4.21 points, or 0.29%, to 1,436.33. The Nasdaq Composite Index gained 1.35 points, or 0.04%, to 3,137.16.
The benchmark 10-year U.S. Treasury note was up 20/32 in price, with the yield at 1.6079%.
"The weaker-than-expected job growth number caused U.S. Treasuries to rally across the curve," said Eric Stein, vice president and portfolio manager at Eaton Vance Investment Managers in Boston. "(It) all but guarantees the Fed will extend the low (interest) rate guidance at next week's policy meeting (and) makes QE3 a lot more likely."
European stocks advanced after the ECB on Thursday unveiled a new plan for potentially unlimited bond buying, which it hopes will lower the borrowing costs for heavily indebted nations like Spain and Italy and ease fears over the future of the euro.
Ten-year Spanish bond yields slid to 5.731%, their lowest since early April.
The FTSEurofirst 300 equity index rose to 1106.49, up 0.16% on the day.
The MSCI world equity index climbed 1.12% to 329.98. The index is back to its level of early May, when demand was still being supported by a massive injection of cheap three-year funds into the banking system by the ECB.
Brent and U.S. crude futures fell in volatile trade. Brent crude was down 0.25% at $113.21 a barrel. U.S. crude was down 0.31% at $95.20 a barrel.
