(Updates to U.S. trading close, adds commentary)
* U.S. job growth accelerates, wages lag
* Wall Street stocks rise, oil falls on oversupply worries
* Treasury yields rise with dollar
By Sinead Carew
NEW YORK, July 7 (Reuters) - Wall Street stocks rose on Friday along with the U.S. dollar and Treasury yields as investors bet that Federal Reserve policy tightening would stay on track after data showed stronger-than-expected U.S. jobs growth with wage increases that lagged forecasts.
Oil prices tumbled after a report showed U.S. crude production rose last week just as OPEC exports hit a 2017 high, casting doubt on efforts to curb persistent oversupply.
U.S. Treasury debt yields and the dollar rose as investors analyzed how the mix of strong jobs and weak wage growth would influence the Fed's plans for an interest rate hike or balance-sheet reduction.
"There is certainly no reason given the data we saw this morning to knock the Fed off the track of probably one more raise this year and maybe an announcement in September about reducing the bond purchase," said Sean Lynch, co-head of global equity strategy at Wells Fargo Investment Institute in Omaha, Nebraska.
Wall Street's S&P 500 stock index closed higher after a selloff on Thursday as investors, while reassured by the strong jobs number, bet weak wage growth would limit the extent of Fed hawkishness.
"The fears of rates rising too quickly have dissipated and market participants are looking for bargains," said Andrew Frankel, co-president of Stuart Frankel & Co in New York.
"Maybe there was just enough bad news in a great jobs number to keep the Fed off the gas pedal," he said.
The Dow Jones Industrial Average rose 94.3 points, or 0.44 percent, to 21,414.34, the S&P 500 gained 15.43 points, or 0.64 percent, to 2,425.18 and the Nasdaq Composite added 63.62 points, or 1.04 percent, to 6,153.08.
The U.S. dollar was up 0.2 percent against a basket of currencies.
The greenback hit two-month highs against the yen and was on pace to post its biggest weekly percentage gain against Japan's currency since late April after the jobs data.
"On balance, the labor market continues to be solid and despite the softer inflation data as of late, the solid employment data should keep the Fed on course for policy normalization," said Charlie Ripley, investment strategist at Allianz Investment Management in Minneapolis.
In Treasuries, longer dated yields briefly hit multi-week highs. Benchmark 10-year notes were last down 5/32 in price to yield 2.3874 percent, from 2.369 percent late on Thursday.
The 30-year bond fell 16/32 in price to yield 2.9289 percent, from 2.904 percent late on Thursday.
Bets that some of the world's major central banks are moving closer to unwinding ultra-loose monetary policies affected stocks this week as European Central Bank minutes showed policymakers are open to tightening.
In Europe, German government bond yields had risen to 18-month highs, weighing on stocks there.
The pan-European FTSEurofirst 300 index lost 0.12 percent but MSCI's gauge of stocks across the globe gained 0.19 percent.
U.S. crude fell 2.61 percent to $44.33 per barrel and Brent was last at $46.82, down 2.68 percent. (Additional reporting by Chuck Mikolajczak, Gertrude Chavez-Dreyfuss and Sam Forgione in New York, Vikram Subhedar in London, Saikat Chatterjee; Editing by James Dalgleish and Meredith Mazzilli)