* Trump says China, U.S. close to a trade deal
* World stocks on track for second week of gains
* U.S. Treasury yields dip (Updates with open of U.S. markets, changes byline, dateline; previous LONDON)
By Chuck Mikolajczak
NEW YORK, April 5 (Reuters) - Global stocks rose on Friday as U.S. labor market data eased worries about an economic slowdown, while optimism that a trade deal between the United States and China was drawing closer also boosted sentiment.
After outsized results on both the upside and downside in the prior two months, data showed U.S. employment growth accelerated from a 17-month low in March, buoyed by milder weather.
U.S. short-term interest-rate futures held on to earlier slight losses after the data, as contracts tied to the Federal Reserve's policy rate continue to price in a little less than a 50 percent chance of an interest rate cut by year's end, and a little more than even odds for a rate cut early next year.
"We wanted to make sure we were going to bounce back, that it was an anomaly we saw in that last jobs report and this was even better than expectations," said JJ Kinahan, chief market strategist at TD Ameritrade in Chicago.
"I don’t think it changes the Fed’s position, it just says, 'hey we are on the path we all thought we were.' That is a good thing."
The Dow Jones Industrial Average rose 37.78 points, or 0.14%, to 26,422.41, the S&P 500 gained 11.92 points, or 0.41%, to 2,891.31 and the Nasdaq Composite added 41.55 points, or 0.53%, to 7,933.34.
The S&P 500 was on pace for a seventh straight day of gains.
U.S. President Donald Trump on Friday said he would not predict a trade deal with China will be reached, even though talks are moving along well. On Thursday, Trump said a deal with China might be announced within four weeks.
Chinese President Xi Jinping reportedly said progress was being made and called for hard work to conclude the talks as early as possible.
The pan-European STOXX 600 index rose 0.21%, heading for its best weekly performance in three weeks, and MSCI's gauge of stocks across the globe gained 0.30% and was poised for a second straight weekly gain.
Better-than-expected data out of Germany and receding fears of a disorderly British departure from the European Union also helped perk up sentiment in Europe.
German industrial output rose 0.7% in February as mild weather helped a surge in construction activity, although manufacturing production slipped.
That came on the heels of a report on Thursday which showed industrial orders fell at the sharpest rate in over two years.
U.S. Treasury yields dipped, with the yield curve US2US10-TWEB flattening, as investors who took a gloomier view of the March U.S. payrolls report stepped into the market, buying longer-dated Treasuries.
Benchmark 10-year notes last rose 2/32 in price to yield 2.5043%, from 2.51% late on Thursday.
Trump said on Friday the Fed should lower rates, noting the jobs numbers showed the economy had performed well but adding that action by the U.S. central bank had really slowed down the economy.
In currencies, the dollar moved slowly higher, on track for a third straight week of gains against a basket of major currencies. The dollar index rose 0.13%, with the euro down 0.07% to $1.1212.
Reporting by Chuck Mikolajczak in New York Editing by James Dalgleish