GLOBAL MARKETS-Stocks edge up, dollar gains after report dims view of US jobs market

By Sinéad Carew and Lucy Raitano

NEW YORK/LONDON, Sept 9 (Reuters) - MSCI's global equity index gained slightly while the dollar rose on Tuesday after an annual U.S. payrolls review revised employment levels through March sharply lower.

The U.S. Labor Department said the economy likely created 911,000 fewer jobs in the 12 months through March than previously estimated, suggesting job growth was already stalling before President Donald Trump's aggressive tariffs on imports.

While the report painted a less rosy picture of the U.S. jobs market, investors noted it does not provide any information about job creation since March. Expectations that the Federal Reserve would start cutting interest rates this month remained intact after the revision.

But investors still plan on closely watching inflation data due out on Wednesday and Thursday, before the Fed makes its next policy decision on September 17.

"The more constructive way to look at this is that the economy has been just fine with half the job creation, and that's what the market has been digesting today," said Julia Hermann, global market strategist at New York Life Investments.

"The combination of a strong legacy of earnings, a constructive earnings outlook, paired with marginal Fed support between now and the end of the year, is the most constructive reason to continue participating in the equity market," she added.

RATE CUT BETS INTACT

Bets on a 25 basis point cut were intact while the probability for a jumbo 50 basis point reduction remained at about 10%, per CME's FedWatch tool.

On Wall Street at 2:53 p.m. ET (1853 GMT), the Dow Jones Industrial Average .DJI rose 220.25 points, or 0.48%, to 45,735.55, the S&P 500 .SPX edged up 14.48 points, or 0.22%, to 6,509.72, and the Nasdaq Composite .IXIC rose 45.34 points, or 0.21%, to 21,844.32.

MSCI's gauge of stocks across the globe .MIWD00000PUS rose 2 points, or 0.21%, to 960.88.

Earlier, the pan-European STOXX 600 .STOXX index finished up 0.06%. Emerging market stocks .MSCIEF rose 12.33 points, or 0.96%, to 1,294.53.

Political uncertainty in various countries has rattled currency and bond markets in the past few sessions.

But European markets brushed off French political upheaval after the government's collapse on Monday, as the event was already priced in.

French President Emmanuel Macron is seeking his fifth prime minister in less than two years after opposition parties united to kick out center-right Prime Minister Francois Bayrou over his unpopular plans for budget tightening.

Investors were also mulling the resignation of Japan's prime minister, a defeat for Argentinian President Javier Milei's ruling party in local elections, and the abrupt replacement of Indonesia's finance minister.

After tumbling more than 13% on Monday, Argentina's main stock index .MERV regained some lost ground on Tuesday, rising 0.3%.

DOLLAR HIGHER

In currencies, while the U.S. dollar fell against Japan's yen after the jobs revision, it trimmed those losses and gained against other currencies.

The dollar index =USD, which measures the greenback against a basket of currencies including the yen and the euro, rose 0.41% to 97.79, with the euro EUR= down 0.48% at $1.1705.

Against the Japanese yen JPY=, the dollar weakened 0.07% to 147.42.

In Treasuries, yields rose as a long-end bond-buying frenzy abated, but they briefly turned lower after the jobs data revision gave more weight to the weakening labor market outlook that had already fueled expectations for more rate cuts this year.

The yield on benchmark U.S. 10-year notes US10YT=RR rose to 4.074%, from 4.046% late on Monday, while the 30-year bond US30YT=RR yield rose 2.8 basis points to 4.7184%.

The 2-year note US2YT=RR yield, which typically moves in step with interest rate expectations for the Federal Reserve, rose 4.7 basis points to 3.542%.

In commodities, oil extended gains and settled higher after the Israeli military said it carried out an attack on Hamas leadership in the Qatari capital Doha.

U.S. crude CLc1 settled up 0.59% or 37 cents at $62.63 a barrel, and Brent LCOc1 ended the session at $66.39 per barrel, up 0.56% or 37 cents.

Gold continued its record rally on expectations for a U.S. interest rate cut while investors looked ahead to the U.S. inflation data.

Spot gold XAU= rose 0.13% to $3,640.12 an ounce.