The dollar jumped to a seven-month high, pushing oil prices lower, and short-term US bond yields rose to their highest in five years on Friday after strong US jobs data bolstered expectations that the Federal Reserve will raise interest rates in December.

Non-farm payrolls increased 271,000 in October, the largest rise since December, while average hourly earnings rose a respectable 9 cents, the Labor Department said. The unemployment rate of 5.0 per cent is the lowest since April 2008 and is in a range many Fed officials consider full employment.

The robust report boosted the likelihood that the Fed will raise rates before year's end for the first time in almost a decade, ending years of easy monetary policy.

"This is a blow-out number," said Kevin Giddis, head of fixed income capital markets at Raymond James in Memphis, Tennessee. "There's a pretty strong feeling that the Fed is going to hike rates a quarter of a point in December."

Kathy Lien, managing director at BK Asset Management in New York, said: "You're going to see a renewed appetite for US dollars."

The dollar index of six major trading currencies hit a high of 99.345, its strongest level since mid-April. It was last up 1.29 per cent at 99.187.

The euro fell to $1.708, its lowest since April, and last traded down 1.48 per cent at $1.0720.

Against the yen, the dollar rose to 123.26 yen, its highest since Aug. 21, and last traded at 123.21, up 1.21 per cent.

Oil prices fell for the third straight day, on track for their third weekly decline in four, as the strong dollar makes commodities denominated in the greenback less affordable to holders of other currencies.

Brent, the global benchmark for oil, fell 54 cents to $47.44 a barrel. US crude slid 86 cents to $44.34.

Yields on US government debt soared.

US two-year yields hit 0.958 per cent, their highest since May 2010, on expectations of a December rate hike. Benchmark 10-year yields hit a three-month high of 2.349 per cent.

Global equity markets were mixed. European shares were higher, but a measure of worldwide stock performance was lower, as were most US stocks.

MSCI's all-country world index fell 0.81 per cent.

European stocks rose on the stronger dollar, which lifted export-oriented shares like autos. The pan-European FTSEurofirst 300 index closed up 0.27 per cent at 1,498.99, while Germany's export-heavy DAX outperformed to gain 0.92 per cent.

The Dow Jones industrial average fell 44.66 points, or 0.25 per cent, to 17,818.77. The S&P 500 slid 10.68 points, or 0.51 per cent, to 2,089.25, and the Nasdaq Composite added 1.32 points, or 0.03 per cent, to 5,129.06.

Stock investors are struggling with the prospect of a Fed tightening and the economic reason behind it, said Brad McMillan, chief investment officer at Commonwealth Financial in Waltham, Massachusetts.

But the unemployment report shows a recent soft spot in jobs data did not indicate a trend, McMillan said.

"The economy is now strong enough to take a slowdown and to continue to move forward strongly," he said, "and that's actually very encouraging for the next 12 to 18 months or so because it says we got some very strong momentum here."- Reuters