Wires

GLOBAL MARKETS-Dollar gains, stocks set fresh highs on U.S. labor report

Herbert Lash

(Adds U.S. market open, byline, changes dateline; previous LONDON)

* U.S payrolls weaker than expected in December

* MSCI all-world, U.S. stock indexes at fresh record highs

* Dollar rises to two-week high

* Oil slips on unexpected rise in U.S. crude inventories

* Dow industrials surpass 29,000 mark

NEW YORK, Jan 10 (Reuters) - The dollar edged higher and global equity markets rallied to fresh highs on Friday after a U.S. labor report showed job growth slowed in December while still underpinning a strong economy that will allow the Federal Reserve to stand pat on interest rate policy.

The U.S. jobless rate held steady at near a 50-year low of 3.5% and nonfarm payrolls increased by 145,000 jobs, above the 100,000 mark needed to keep up with population growth, the monthly Labor Department employment report said.

The yield on U.S. government debt fell, pushing prices up, as the pace of hiring remained strong enough and the unemployment rate low enough to keep on track the longest U.S. economic expansion in history.

The soft U.S. payrolls number, following a batch of strong economic figures, was unlikely to sway the Fed from its current neutral stance on rates, analysts said.

"The economy continues to grow and there's an absence of inflation pressure, and that's positive for stocks and bonds," said Joseph LaVorgna, chief economist for the Americas at French bank Natixis in New York.

"There was no way this type of report was going to get the market nervous about recession risks or inflation. It's a win for both the stock and bond market."

MSCI's gauge of stocks across the globe gained 0.28% to a record, while the three main indexes on Wall Street also set fresh highs for the second day in a row.

On Wall Street, the Dow Jones Industrial Average crossed the 29,000 mark for the first time, helped by gains in technology and healthcare stocks.

Technology shares, the market leader of the past decade, were poised for the sharpest gains this week among the 11 main S&P sectors. Investors welcomed news that sales of Apple's iPhones in China in December jumped more than 18% on the year.

The Dow rose 13.19 points, or 0.05%, to 28,970.09. The S&P 500 gained 6.55 points, or 0.20%, to 3,281.25 and the Nasdaq Composite added 29.88 points, or 0.32%, to 9,233.31.

European shares also rose, without hitting new records. The pan-European STOXX 600 index rose 0.04% and Germany's DAX rose 0.15%, while Britain's FTSE 100 advanced 0.13%.

Emerging market stocks rose 0.52%.

The U.S. dollar rose to two-week highs on Friday, on track for its biggest weekly gain in two months, as easing tensions between the United States and Iran helped boost risk appetite.

The dollar index fell 0.04%, with the euro up 0.05% to $1.111. The Japanese yen weakened 0.01% versus the greenback at 109.54 per dollar.

MSCI's emerging market currency index, although little changed on Friday, hit 1-1/2-year highs on Thursday in what is likely to be its sixth straight week of gains. It has also benefited from three U.S. rate cuts last year.

Brent oil futures fell below $65 a barrel as Middle East tensions eased and investors focused on rising U.S. crude inventories and other signs of ample supply.

Brent crude, the global benchmark, slid 42 cents to $64.95 a barrel, and was heading for its first weekly decline in six weeks. West Texas Intermediate crude slipped 44 cents to $59.12.

Spot gold added 0.4% to $1,558.98 an ounce.

(Reporting by Herbert Lash; Editing by Tom Brown)