GLOBAL MARKETS-Stocks, dollar gain on surprising U.S. jobs data

* Global stocks, dollar rally on upbeat U.S. jobs report

* Labor report suggests U.S. on the brink of creating jobs

* Bond prices fall as jobs data bolsters recovery hopes

* Oil hits seven-week high above $81 barrel on jobs data (Updates with open of U.S. markets; adds byline, dateline)

By Herbert Lash and Emelia Sithole-Matarise

NEW YORK/LONDON, March 5 (Reuters) - World equities rose and the dollar strengthened on Friday after fears that a stormy February would worsen a U.S. jobs picture proved false and boosted optimism that economic recovery is picking up steam.

The brighter outlook spurred appetite for assets perceived as riskier, such as stocks and crude oil prices, and led investors to sell lower-risk government debt.

Oil rose to a seven-week high nearing $82 a barrel, in spite of a stronger dollar. Crude oil also received a boost from signals that China will maintain its economic stimulus measures. For details see: [ID:nSGE62405D]

A smaller-than-expected contraction in U.S. payrolls was surprising given the expectations that heavy snowstorms across the United States in February would deepen job losses.

The Labor Department said U.S. employers cut 36,000 jobs and unemployment remained at 9.7 percent, both better than expected. Analysts polled by Reuters expected payrolls to drop by 50,000 and the jobless rate to edge up to 9.8 percent. [ID:nN04107795]

"Obviously, given there was some weather affect, this does say that we are now turning the corner on positive job creation," said Nigel Gault, chief U.S. economist at IHS Global Insight in Lexington, Massachusetts.

The MSCI world equity index <.MIWD00000PUS> rose 0.65 percent, and European indexes were up about 1 percent.

Shortly after the U.S. open, the Dow Jones industrial average <.DJI> was up 53.06 points, or 0.51 percent, at 10,497.20. The Standard & Poor's 500 Index <.SPX> was up 6.05 points, or 0.54 percent, at 1,129.02. The Nasdaq Composite Index <.IXIC> was up 11.82 points, or 0.52 percent, at 2,304.13.

Benchmark 10-year notes <US10YT=RR> traded 15/32 lower in price to yield 3.66 percent, the highest in more than a week.

U.S. light sweet crude oil <CLc1> rose $1.72 to $81.93 a barrel.

The dollar hit a session high versus the yen at 90.27 <JPY=> after the data, versus 89.50 yen earlier. It was last at 90.03 yen. The euro <EUR=> was down 0.10 percent at $1.3566.

The euro had steadied after dropping to $1.3549 on Thursday as European Central Bank President Jean-Claude Trichet said the recovery in the euro zone would be uneven.

Major investment houses have started to push back expectations for a first rise in ECB rates after the central bank extended unlimited lending to banks for longer than expected. [ID:nLDE62412Y]

GREEK WORRIES

In Europe, investors were also willing to take on riskier bets on more encouraging signs that Greece will be able to finance its debts after it successfully raised 5 billion euros on Thursday via a 10-year bond syndication.

Greek government bonds outperformed euro zone benchmark German Bunds, with the premium investors demand to buy 10-year Greek debt rather than Bunds falling to 288 basis points from 299 bps in late European trade on Thursday. (Reporting by Chris Reese, Wanfeng Zhou in New York; David Sheppard, Alex Lawler and Dominic Lau in London; writing by Herbert Lash; Editing by Theodore d'Afflisio)