(Updates throughout; refreshes prices at 0941 GMT)

By Amanda Cooper

LONDON, May 10 (Reuters) - Global shares rose to

one-month highs on Friday while the dollar held steady, giving

commodities a boost, after softer U.S. jobs data gave investors

confidence that interest rates will start to decline this year.

In currencies, the pound headed for a modest weekly loss

after the Bank of England (BoE) on Thursday paved the way for

the start of rate cuts as soon as next month, while data showed

the UK economy exited a mild recession in the first quarter of

this year.

The MSCI All-World index was up 0.13%, as

equities in Asia and Europe took their lead from a rally on Wall

Street overnight, after data showed the number of people filing

for jobless benefits for the first time rose more than expected,

suggesting the U.S. economy is beginning to slow.

But rather than putting the brakes on the stock market, the

numbers are giving investors confidence in the ability of the

Federal Reserve to cut interest rates this year, as central

banks in Europe have started to lower borrowing costs.

The STOXX 600 rose 0.9% towards record highs on

Friday, heading for one of its strongest weekly performances

this year. U.S. stock futures were up 0.4-0.5%.

"What could have been a crack in the overall market

bullishness appearing has turned into an opportunity to get long

again and that's what we're seeing now in May," David Morrison,

market strategist at Trade Nation, said.

Thursday's weekly jobless data followed last week's report

that showed U.S. job growth slowed more than expected in April

and the increase in annual wages fell below 4.0% for the first

time in nearly three years.

INFLATION AHEAD

Markets will be closely watching April U.S. producer price

index and the consumer price index out next week for signs that

inflation has resumed its downward trend towards the Federal

Reserve's 2% target rate.

Hotter-than-expected inflation reports last month quashed

any lingering expectations of near-term U.S. rate cuts. Markets

are now fully pricing in a cut only in November though there is

still a chance of the Fed moving in September.

In contrast, markets now imply a 50-50 chance of a BoE cut

in June and are almost fully priced for August. They also imply

an 88% chance the European Central Bank will ease in June.

BOE Governor Andrew Bailey said there could be more

reductions than investors expect, the latest sign of the growing

divergence between Europe and U.S. rate outlook.

Sterling was steady at $1.2534, having touched a

more than two-week low of $1.2446 on Thursday.

Traders currently anticipate roughly 45 basis points of cuts

this year from the Fed. In comparison, traders are pricing in 58

bps of easing from the BoE this year, while anticipating 70 bps

of cuts from the ECB.

The dollar index, which measures the U.S. currency

versus six others, was flat at 105.22, as the euro

held steady at $1.0784, set for its fourth straight week of

gains on the dollar.

The yen remains in focus after last week's

suspected rounds of interventions from Japanese authorities

totalling nearly $60 billion aimed at pulling the yen off its

34-year lows of 106.245 per dollar touched on April 29.

On Friday, the yen was last at 155.70 per dollar, with

Japan's Finance Minister Shunichi Suzuki repeating Tokyo's

recent warnings that it was ready to take action against

disorderly currency moves.

Ben Bennett, Asia-Pacific investment strategist at Legal And

General Investment Management, said the Ministry of Finance

wants to avoid spikes in volatility which could negatively

impact domestic financial markets.

"So like we suspect a few days ago, they will intervene if

intraday moves become too large. But I don't think they'll push

against a steady depreciation, like we've seen since."

With the dollar taking a breather, commodities pushed

higher. Brent crude futures were up 0.4% at $84.19 a

barrel, while copper futures rose 2.1% to $10,105 a

tonne and gold rose 1.1% to $2,371 an ounce.