The dollar and US government debt yields jumped on Friday as a strong American labour market report raised expectations that the Federal Reserve will increase interest rates by mid-year.

Wall Street initially rose and European equities hit a seven-year high on the Labour Department report that showed solid US job growth, with wages rebounding strongly. More than one million jobs have been created over the past three months, the first time that has happened since late 1997.

Oil futures bounced up from near-six-year lows, but gold fell more than two per cent and spot silver slid 3.7 per cent. US Treasury yields rose and the yield curve flattened as traders increased bets the Fed will raise rates by mid-year.

But Wall Street’s weak upside response to the data raised some concerns about the US equity market’s strength, and US stocks slipped in the afternoon to break even or lower.

Real estate stocks and the utilities sector led the decline as their higher yields lose appeal in a rising rate environment, while financials gained as they stand to see an increase in profits from higher rates.

Utilities fell 3.31 per cent and financials rose 1.1 per cent. One of the biggest percentage losers in the S&P 500 was Simon Properties Group, which lost 3.8 per cent.

The Dow Jones industrial average was down 39.43 points, or 0.22 per cent, at 17,845.45. The Standard & Poor’s 500 index was down 1.40 points, or 0.07 per cent, at 2,061.12. The Nasdaq Composite index was down 6.99 points, or 0.15 per cent, at 4,758.10.

In Europe, the FTSEurofirst 300 index of top regional shares rose 0.2 per cent to close at 1,490.84. But markets in Britain, Germany, France and Italy all fell on mixed earnings reports and worries about a bailout of Greece, putting a damper on global equity gauges.

MSCI’s all-country world stock index fell 0.33 per cent.

Brent crude was on track for its biggest weekly rise since 2011, boosted by fighting in Libya and the strong economic signals from the United States.

Benchmark Brent crude traded $1.21 higher at $57.78 (€51) a barrel. US crude for March delivery settled up $1.21 at $51.69 (€45.68) a barrel.

Yields on German bunds and British gilts also rose on the US jobs data.

The dollar index was up 1.2 per cent at 94.735, while against the yen, the dollar rose 1.44 per cent to 119.20.

The euro was down 1.41 per cent at $1.1313.