By Nigel Stephenson
LONDON (Reuters) - European shares rose sharply on Monday, following Asian stocks higher, while the dollar was on the defensive after Friday's weak U.S. jobs data signalled the era of low-cost money had further to run.
Wall Street, which gained on Friday after the market saw the data pushing back the first Federal Reserve rate hike since 2006, was expected to rise later on Monday, index futures showed.
Friday's data showed just 142,000 more U.S. jobs were created last month, compared with a forecast of 203,000, and that hourly wage growth fell.
This fuelled doubts over whether the world's largest economy was strong enough to withstand an interest rate rise before the end of the year and meant the cheap funds that have lifted financial assets across the globe would be around for a while.
"After the (jobs) figures in the U.S., the market is more and more convinced that the Fed will delay rate hikes and the probability that the ECB (European Central Bank) will deliver more is also becoming a central scenario," said BNP Paribas rate strategist Patrick Jacq.
Others said the Bank of Japan could ease policy as soon as this week, though action at its Oct. 30 meeting may be more likely.
Before Friday's data, the Fed had been widely expected to raise U.S. interest rates before the end of the year. It decided not to move in September because of anxiety in global markets about China's slowing economic growth.
The pan-European FTSEurofirst 300 stocks index rose 2.5 percent to its highest since Sept. 22. France's CAC index gained more than 3.4 percent after forecast-beating business activity data.
"The economic data in France was today's surprise," said Andrea Cuturi, chief investment officer at asset manager Anthilia Capital.
MSCI's broadest index of Asia-Pacific shares outside Japan rose to a two-week high and was last up 2.1 percent, while Japan's Nikkei closed up 1.6 percent.
Wall Street had already risen on Friday, and S&P index futures signalled further modest gains later on Monday.
Chinese markets were closed for a holiday.
The dollar edged lower against a basket of currencies but remained well above lows struck after Friday's numbers.
The euro was up 0.2 percent at $1.1229, although the yen was down 0.4 percent at 120.27 per dollar as some analysts suspect the Bank of Japan could unveil further monetary easing measures as early as Wednesday.
Yujiro Goto, currency strategist at Nomura, said: "The euro's rise above $1.13 could be capped, while dollar/yen is likely to be supported at 120 yen."
With stocks on the up, yields on low-risk government debt also rose. German 10-year government bonds, the euro zone benchmark, added 3.9 basis points to 0.55 percent and 10-year U.S. Treasury yields rose 2 bps to 2.01 percent.
Portuguese 10-year yields initially hit a five-month low after the centre-right government of Prime Minister Pedro Passos Coelho won an election on Sunday that was a test of its tough austerity stance.
They last traded at 2.34 percent, up 2.5 bps.
Oil prices, which rose 1 percent on Friday after the number of active U.S. oil rigs fell for a fifth consecutive week, made further gains as Russian said it would be willing to discuss the oil market with fellow producers. Crude prices have more than halved since mid-2014.
Brent was last up 63 cents at $48.76 a barrel.
"Investors seem to expect a possible reduction in oil output to be agreed during rebalancing procedures," said Yoo-jin Kang, commodities analyst at NH Investment & Securities based in Seoul.
Gold slipped as stocks rose and last traded at $1,132.50 an ounce, having largely held on to gains made in its biggest one-day jump in nine years on Friday.
(Additional reporting by Lisa Twaronite in Tokyo, Meeyoung Cho in Seoul, Marius Zaharia and Anirban Nag in London; Editing by Catherine Evans/Ruth Pitchford)