The world's largest economy added 209,000 net new positions in July, well above forecasts, driving the unemployment rate down to 4.3 percent.
The data possibly gives the Federal Reserve a clear shot at raising rates after months of inflation weakness clouding the outlook, dealers said, although some noted that wages are still not rising fast enough for comfort.
"The July jobs report from the US appeared to tick all the boxes when the numbers were released, strong jobs gains, higher participation and unemployment back at 16 year lows," said Craig Erlam, senior market analyst at Oanda.
"But as ever, there was one crucial component missing," he cautioned, "the path back to higher earnings continues to be a painfully slow one. The (workers') earnings numbers for June were once again the only disappointment in an otherwise stellar report."
- Good enough for Fed? -
But others were less reticent. "Strong wage growth is key takeaway today," ING Economics said. "Throw in decent inflation next week and markets might start tentatively re-aligning with Fed dots."
One strong jobs report may not however be enough to sway sceptical investors trying to second-guess the US central bank, they said.
The employment data temporarily dispelled gloom triggered by a report on a probe into alleged Russian interference in the US election.
They also helped European equities extend early tentative gains ahead of the weekend, as newly-found dollar strength took the pressure off the euro whose recent rise has been threatening to undermine the competitiveness of eurozone exporters.
But fundamentals are still in favour of the European single currency, many believe.
"Investors are totally in love with the euro at the moment -- it's come from a very cheap level and taken on a momentum of its own," William Hamlyn, investment analyst at Manulife Asset Management, told AFP.
"There's a general nervousness that this strong euro is beginning to impact European corporate profits -- we are starting to see it in this quarter's results," he said.
Overnight, the revelation by the Wall Street Journal that special counsel Robert Mueller has convened a grand jury to investigate Russia's interference in the 2016 presidential election -- a step towards possible criminal indictments -- sparked a furious reaction from President Donald Trump and dented gains on Wall Street.
The report sent the European single currency surging on Wednesday to $1.1910 -- its highest level since early January 2015. By mid-afternoon in Europe Friday, the euro had retreated to $1.1829.
- Key figures around 1335 GMT -
Euro/dollar: DOWN at $1.1829 from $1.1871 at 2100 GMT on Thursday
Pound/dollar: DOWN at $1.3075 from $1.3138
Dollar/yen: UP at 110.69 yen from 110.04 yen
London - FTSE 100: UP 0.4 percent at 7,500.71
Frankfurt - DAX 30: UP 0.7 percent at 12,237.90
Paris - CAC 40: UP 1.0 percent at 5,180.87
EURO STOXX 50: UP 0.8 percent at 3,492.53
New York - Dow: UP 0.2 percent at 22,070.91
Tokyo - Nikkei 225: DOWN 0.4 percent at 19,952.33 (close)
Hong Kong - Hang Seng: UP 0.1 percent at 27,562.68 (close)
Shanghai - Composite: DOWN 0.3 percent at 3,262.08 (close)
Oil - Brent North Sea: UP 3 cents at $52.02 per barrel
Oil - West Texas Intermediate: UP 2 cents at $49.05