GLOBAL MARKETS-Stocks hit weekly highs as markets shrug off dismal U.S. jobs data

(Updates with U.S. market open)

* U.S. jobs data worst in a generation, but better than expectations

* U.S.-China co-operation boosts sentiment

* London stock exchange closed for bank holiday

NEW YORK, May 8 (Reuters) - Global share markets rallied on Friday, hitting weekly highs, and oil prices gained as more governments around the world began gradually reopening their economies and Sino-American trade tensions eased.

The optimism contrasts with the economic data. U.S. unemployment numbers showed the coronavirus pandemic cost the economy 20.5 million jobs in April, the steepest plunge in payrolls since the Great Depression.

The dollar extended gains against the yen and turned higher versus the euro on Friday after the U.S. jobs data came in better than expected.

“It’s a historic, tragic day for the U.S. economy but we’re still seeing markets be near their session highs because expectations are that this is going to be short-lived,” said Ed Moya, senior market analyst at OANDA.

The pan-European STOXX 600 index rose 0.74% and MSCI’s gauge of stocks across the globe gained 1.44%.

The Dow Jones Industrial Average rose 341.94 points, or 1.43%, to 24,217.83, the S&P 500 gained 35.31 points, or 1.23%, to 2,916.5 and the Nasdaq Composite added 107.21 points, or 1.19%, to 9,086.87.

Still, some market watchers worried that the long-term impact will be worse than feared. By the raw numbers, the coronavirus crisis has left more Americans unemployed in one month than during the entire Great Depression, noted Jeremy Stretch, head of G10 FX strategy at CIBC Capital Markets.

“It is important not to underplay the scale of this shock to the U.S. economy... especially since services makes up such a proportion of the U.S. economy,” said Michael Hewson, chief market analyst at CMC Markets.

Top U.S. and Chinese trade representatives discussed their Phase 1 trade deal on Friday, with China saying they agreed to improve the atmosphere for its implementation and the United States saying both sides expected obligations to be met.

That calmed investors’ fears about renewed trade tensions after U.S. President Donald Trump and other top officials blamed China for the spread of the coronavirus and threatened punitive action, including possible tariffs and shifting supply chains away from China.

“The threat of a breakdown in negotiations for now at least has been averted,” said CIBC’s Stretch.

Oil prices climbed as some countries moved ahead with plans to relax economic and social lockdowns imposed to halt the coronavirus pandemic, kindling market hopes for a boost in demand for crude and its products.

U.S. crude recently rose 3.01% to $24.26 per barrel and Brent was at $29.92, up 1.56% on the day.

Both contracts showed some easing from the morning’s gains, but they were still heading for a second week of gains after the lows of April.

The dollar index fell 0.238%, with the euro up 0.25% to $1.0859.

The Japanese yen weakened 0.15% versus the greenback at 106.45 per dollar.

Spot gold was steady at $1,717.52 per ounce by 1202 GMT after hitting its highest since April 27 at $1,722.56. Bullion has risen more than 1% so far this week.

Reporting by Imani Moise; Editing by Dan Grebler