* MSCI world stocks index sees biggest rise in a month
* Weaker-than-expected jobs report gives Fed less reason to
* Kuroda underscores no let up in BOJ stimulus
* Oil jumps 3 percent on hopes of output cuts
By Marc Jones
LONDON, Sept 5 World shares had their biggest
jump in over a month on Monday as a pact between Saudi Arabia
and Russia sent oil prices surging and lacklustre U.S. jobs
figures pushed back Federal Reserve interest rate rise
European stocks touched an eight-month high as oil
and mining firms cheered what at one point was a
5 percent leap in crude prices.
Saudi Arabia and Russia, two of world's top oil producers,
announced at a meeting of global leaders in China that they
would start working together to stabilise the market, including
"Freezing production is one of the preferred possibilities,"
Saudi Energy Minister Khalid al-Falih said speaking alongside
Russian counterpart Alexander Novak. "But it does not have to
happen specifically today."
Oil eventually halved its initial gains as traders noted the
lack of immediate measures, but the buoyant mood elsewhere
Bonds were in favour after U.S.
payrolls numbers on Friday had tamed Fed bulls, while emerging
market stocks were gunning for their best day since
July as they climbed 1.3 percent.
"We don't expect the Fed to do anything until next year so
that lays the ground for further advances," said TD Securities
strategist Paul Fage.
Though the Fed reaction and oil price surge were the
markets' main drivers, they were not the only factors in play.
The yen turned around its recent losing streak as the head
of the Bank of Japan disappointed investors who had expected
clearer signals that Tokyo's monetary policy would be eased
further this month.
Though Bank of Japan Governor Haruhiko Kuroda signalled its
already massive stimulus programme would continue, there was
nothing explicit enough to suggest an expansion is imminent.
Later Japan PM Shinzo Abe said he trusted Kuroda to "take the
The dollar dropped 0.6 percent to 103.35 yen having
gained more than 4 percent against the Japanese currency in the
last six days. The euro inched up to $1.1115.
Britain's sterling also did damage to the greenback. It hit
a one-month high of 1.3360 as data showed the UK services
industry bounced back strongly from a seven-year low hit after
the vote to leave the European Union.
The Markit/CIPS Purchasing Managers' Index (PMI) jumped to
52.9 in August from July's 47.4. It was the biggest one-month
gain in the survey's 20-year history and one which beat all
forecasts in a Reuters poll.
"It remains too early to say whether August's upturn is a
dead cat bounce or the start of a sustained post-shock
recovery," IHS Markit economist Chris Williamson said.
"But there's plenty of anecdotal evidence to indicate that
the initial shock of the June vote has begun to dissipate."
U.S. markets were closed for a Labour Day public holiday
meaning there was no trading on Wall Street.
Oil's rise was its the second bumper session in a row as the
Saudi/Russia pact fanned speculation that major producers could
strike a firmer deal in Algeria later this month.
Brent crude futures for November delivery were last up $1
per barrel at $47.70 a barrel having been as high as $49.40 and
U.S. crude for October delivery was up at $45.25 having been as
high as $46.53 a barrel.
"Verbal intervention was again needed to trigger a recovery
towards $50," senior ABN Amro economist Hans van Cleef said,
referring to the Saudi and Russian comments.
In Asia overnight, MSCI's broadest index of Asia-Pacific
shares outside Japan ended up 1.6 percent, while
Japan's Nikkei rose 0.7 percent to its highest close
since May 31.
Friday's U.S. jobs report showed non-farm payrolls rose by
151,000 jobs in August after an upwardly revised 275,000
increase in July. Economists polled by Reuters had expected a
rise of 180,000.
U.S. Fed Funds futures prices indicated investors were now
pricing in only around a 20 percent chance of a September hike
down from over 30 percent before the jobs data. It remains at
more than 60 percent by the end of year.
(Additional reporting by Lisa Twaronite in Tokyo, Ahmad Ghaddar
in London Editing by Jeremy Gaunt)