* Stocks and dollar rise, bonds fall on U.S. jobs data
* Easing Italy worries help risk markets in Europe
* Trade war fears resurface after fresh U.S. tariffs
* Emerging markets under pressure; oil falls (Updates to reflect U.S. afternoon trading)
By Trevor Hunnicutt
NEW YORK, June 1 (Reuters) - World stocks and the U.S. dollar rose while Treasury debt prices fell on Friday as investors welcomed a stronger-than-expected American jobs report and an apparent end to a political crisis in Italy, although prospects for a full-blown global trade war limited the gains.
The MSCI All-Country World index, which tracks shares in 47 countries, gained 0.81 percent. Still, it was set for a third week of losses, brought on by earlier risks of a snap election in Italy.
The robust U.S. jobs report locked in expectations of an interest rate hike by the Federal Reserve this month and sent U.S. stocks higher.
Nonfarm payrolls increased by 223,000 jobs in May, while average hourly earnings rose 0.3 percent after edging up 0.1 percent in April. The unemployment rate dropped to an 18-year low of 3.8 percent.
"The takeaway is the economy is doing nicely," said Tony Roth, chief investment officer at Wilmington Trust Investment Advisors Inc.
"Inflation is exactly where they want it to be," he said of the Fed.
The good news helped names like Apple Inc, Microsoft Corp, and Google parent Alphabet Inc resume their role leading indexes higher.
The Dow Jones Industrial Average rose 219.37 points, or 0.9 percent, to 24,635.21, the S&P 500 gained 29.35 points, or 1.08 percent, to 2,734.62 and the Nasdaq Composite added 112.22 points, or 1.51 percent, to 7,554.33.
Benchmark 10-year Treasury notes fell 21/32 in price to yield 2.8985 percent, from 2.822 percent late on Thursday.
Leaders of Italy's anti-establishment parties revived coalition plans late on Thursday, apparently ending three months of political turmoil. The new government was being installed on Friday. That sent stocks broadly higher as government borrowing costs moved lower in Europe.
Of potentially greater concern to investors was the renewed prospect of a global trade war after the United States imposed steel and aluminum tariffs on Canada, Mexico and the European Union.
Canada and Mexico retaliated with levies on billions of dollars of U.S. goods from orange juice to pork. The European Union was set to tax bourbon and Harley-Davidson Inc motorcycles.
The biggest hurdle for U.S. exports may be the climbing dollar. An index of the greenback against its trading partners rose 0.22 percent.
The Canadian dollar fell 0.01 percent and the Mexican peso lost 0.09 percent versus the U.S. dollar. Both currencies fell on Thursday after the U.S. decision to impose tariffs.
The strong dollar weighed on oil prices, which are quoted in the currency. U.S. West Texas Intermediate (WTI) crude futures fell $1.23 a barrel to settle at $65.81 a barrel. Global benchmark Brent fell 77 cents to $76.79 a barrel. Brent crude oil futures contracts and U.S. WTI hit its widest for three years before narrowing.
But Brent is still nearly 30 percent above its lows for this year, heaping pressure on emerging markets already taxed by the rising dollar and, now, accelerating withdrawals by foreign investors. Investors globally pulled $2 billion from emerging market stock funds in the most recent week ended Wednesday, the most since the last week of 2016, according to research service EPFR Global.
Brazilian financial markets dropped on Friday after the chief executive officer of Petroleo Brasileiro SA resigned, driving down shares in the state-controlled oil company as much as 21 percent. The Brazilian real weakened 1.01 percent against the greenback.
Turkey's lira, meanwhile, weakened more than 2 percent against the dollar, resisting the efforts of the central bank to arrest a sharp slide this year.
Reporting by Trevor Hunnicutt; Additional reporting by Ritvik Carvalho and Dhara Ranasinghe in London and Shinichi Saoshiro in Tokyo; Editing by Bernadette Baum and Jonathan Oatis