U.S. stocks climbed Friday, with J.P. Morgan Chase, Caterpillar and International Business Machines leading the charge as a better than expected jobs report for August helped the market snap a three week losing streak.

The Dow Jones Industrial Average added 127.83 points, or 1.24%, to 10447.93, its highest close since Aug. 10.

The measure rose 2.93% this week, its biggest weekly gain since the week ended July 23 and its best pre Labor Day week since 1990. Friday's gain also helped the Dow erase its losses for the year. It is now up 0.19% for 2010.

All 30 of the Dow's components rose Friday. J.P. Morgan was the measure's best performer with an increase of 1.01, or 2.7%, to 39.17, while Caterpillar advanced 1.54, or 2.3%, to 70.08, and IBM tacked on 2.54, or 2%, to 127.58. The Nasdaq Composite rose 33.74, or 1.53%, to 2233.75.

The Standard & Poor's 500 index climbed 14.41, or 1.32%, to 1104.51. All of the measure's sectors rose, led by financials. The gains followed government data showing U.S. job losses mounted at a more modest pace than expected in August.

Nonfarm payrolls fell by 54,000 last month, roughly half the decline that had been feared and matching the level of revised losses recorded the previous month. The unemployment rate, calculated using a separate household survey, edged up to 9.6%, as expected.

The jobs data followed reports on housing and manufacturing this week that came in above expectations, casting new doubt on a double dip recession and fueling the market's strong start to September.

European market

European stocks advanced Friday, rallying in the wake of better than expected employment data out of the U.S. The Stoxx Europe 600 index, which was up just 0.4% before the data, finished up 0.9% at 260.40. The index clocked gains of 3.7% during the week after a lackluster performance in August.

Non-farm payrolls declined by 54,000 in August, the Labor Department said Friday. That was below the 105,000 loss expected by economists polled by MarketWatch.

Also, private sector payrolls rose more than expected. Virtually all sectors in Europe were in the black, though banks were in the lead across Europe.

The French CAC-40 index rose 1.1% to 3,672.20 points, helped by a 3.7% gain for shares of Societe Generale, a 3.3% rise for Credit Agricole and a 2% rise for BNP Paribas. Capgemini extended gains for a second day, up 2.4%. On Thursday the company announced a deal to buy a 55% stake in CPM Braxis, Brazil's biggest information technology group.

Germany's DAX-30 rose 0.8% to 6,134.62 points, led by shares of Daimler AG, up 1.6% and Man AG, up 2.1%; The U.K. FTSE 100 index closed up 1.1% to 5,428.15 points, with shares of Barclays PLC up 4.2%.

Most Asian stock markets advanced Friday with Japanese stocks posting their third consecutive gain on the back of strong exporters, but weakness in Chinese banking and property stocks weighed on Shanghai.

An unexpected increase in U.S. pending home sales helped ease economic worries, but transaction volumes were muted in many equity markets, and stocks and currencies were confined to narrow ranges as cautious investors awaited Friday's U.S. nonfarm payrolls report for August.

Japan's Nikkei Stock Average rose 0.6%, South Korea's Kospi advanced 0.2%, Hong Kong's Hang Seng Index ended up 0.5%, Taiwanese shares climbed 1.4% and the Shanghai Composite index ended flat. Regional technology shares outperformed after the Nasdaq Composite rose 1.1% Thursday.

Elpida Memory rose 3.4% and Sony added 2.4% in Tokyo, while Seoul Semiconductor soared 6.5% and Hynix Semiconductor gained 3.3% in Seoul. In Taipei, Chimei Innolux Corp. gained 6.9% and MediaTek soared 6.7%, while Nanya Technology surged by the day's 7% limit.

Commodities and metals

Base metals closed mixed on the London Metal Exchange Friday after a better than expected U.S. labor report was offset by weak non-manufacturing data and a spate of profit taking.

The complex also took a tumble on the latest Institute for Supply Management figures, which showed the U.S. non-manufacturing sector expanded last month at a much slower pace than expected. Crude futures ended lower Friday after a report showed growth in the U.S. service sector slowed last month.

Light, sweet crude for October delivery settled 42 cents, or 0.6%, lower at $74.60 a barrel on the New York Mercantile Exchange. Brent crude on the ICE Futures exchange was 35 cents, or 0.5%, lower at $76.58 a barrel.

Gold futures lost ground as a stronger than expected jobs report from the U.S. dulled some of the metal's safe haven allure, but a weaker dollar checked those losses.

The most actively traded gold contract, for December delivery, fell $2.30, or 0.2%, to settle at $1,251.10 a troy ounce on the Comex division of the New York Mercantile Exchange.