CORRECTED-GLOBAL MARKETS-Stocks up on U.S. jobs data; U.S. dollar falls

(Corrects Dec payrolls gain for revision in paragraph 7 and date of GDP publication in paragraph 8)

* U.S. nonfarm payrolls up 157,000 in January

* U.S. and European stocks get a lift, MSCI world index higher

* U.S. dollar dips against euro to $1.3658

NEW YORK, Feb 1 (Reuters) - U.S. and European stocks gained and the U.S. dollar extended its decline against the euro on Friday after data showed U.S. payrolls grew modestly in January and that gains in the previous two months were bigger than initially reported. The euro's rise to a fresh 14-month high against the dollar came on rising risk tolerance after the jobs data. But the dollar was already under pressure with after the U.S. Central Bank earlier this week said it will maintain its bond-buying and loose monetary policies. The MSCI world equity index was up 0.4 percent, having strengthened earlier on factory activity surveys for January in China and the euro zone, which increased optimism over the global growth outlook. "The combination of stronger-than-expected job growth, combined with an unemployment rate that suggests the Fed will remain in stimulus mode, should be received well by the equity market," said Todd Salamone, director of research at Schaeffer's Investment Research in Cincinnati, Ohio. The Dow Jones industrial average was up 84.14 points, or 0.61 percent, at 13,944.72. The Standard & Poor's 500 Index was up 7.89 points, or 0.53 percent, at 1,506.00. The Nasdaq Composite Index was up 16.56 points, or 0.53 percent, at 3,158.70. The FTSEurofirst 300 was up 0.5 percent at 1,179.34. American employers added 157,000 new jobs to their payrolls in January, down from a gain of 196,000 in December after the prior month was revised up from a gain of 155,000. There were 127,000 more jobs created in November and December than previously reported. The jobs growth figures soothed some of the concerns about the outlook for the U.S. economy after disappointing fourth quarter GDP figures were released on Wednesday.

The euro was last up 0.1 percent at $1.3600 with the session peak at $1.3674. A separate report showed U.S. consumer sentiment unexpectedly improved in January as Americans felt Washington's deal to avert the "fiscal cliff" at the beginning of the year boded well for the economy. In other data, the pace of growth in the U.S. manufacturing sector picked up in January to its highest level in nine months as new orders and employment improved, according to an industry report released on Friday. The Institute for Supply Management (ISM) said its index of national factory activity rose to 53.1 from 50.2 in December, beating economists' expectations of 50.6. It was the highest level since April of last year. A source of strength for the economy in the early years of the recovery, the manufacturing sector lost some steam in the second half of last year and contracted in November in the wake of superstorm Sandy. German Bund futures edged higher to last trade 44 ticks up on the day at 142.33. The benchmark 10-year U.S. Treasury note was up 13/32, with the yield at 1.9368 percent.

(Reporting By Nick Olivari; editing by Clive McKeef)