* Doubts over U.S. economic outlook still dominate
* Dollar rises but on course for worst week in 6 years
* U.S. yields rise to day’s high
By Anirban Nag
LONDON, Feb 5 (Reuters) - The dollar rose against a basket of currencies on Friday along with Treasury yields, but global stocks fell after a key U.S. jobs report painted a mixed picture of the labour market and left investors with a muddled view on rate hike prospects.
Non-farm payrolls increased by 151,000 jobs last month, well below forecasts of 190,000 while the unemployment rate was at 4.9 percent, the lowest since February 2008, the Labour Department said on Friday. Surging wages also suggested the labor market recovery remains on track.
After the report, Fed funds futures contracts showed traders are pricing in a 40 percent chance that the Federal Reserve will next raise rates in December. Before the report they expected the Fed to wait until well into next year before raising rates.
“The market is looking at different things, we’ve got the headline, which is a little bit softer, and the average hourly earnings that are much better,” said Aaron Kohli, interest rate strategist at BMO Capital Markets, New York.
U.S. stock index futures turned negative after the data while European stocks also fell.
The dollar index rose 0.6 percent to 97.05, having endured a pretty rough week. The dollar has shed 2.7 percent this week as expectations that the Fed would raise rates at least once this year evaporated on signs of domestic weakness and broader concerns over global growth.
After a weak service-sector business sentiment report on Wednesday and dovish comments from New York Federal Reserve chief William Dudley, U.S money markets predicted no rise in official interest rates this year. The Federal Reserve’s own forecasts called for four increases.
U.S. bond yields rose after the jobs report, with the 10-year yield rising to 1.87 percent. Still, it has fallen by 10 basis points since the start of this month. (Editing by Toby Chopra)