By Chibuike Oguh

NEW YORK (Reuters) – Global equities rose on Thursday after the U.S. House of Representatives passed a bill to raise the federal debt ceiling, while U.S. Treasury yields fell as data reflected a cooling labor market that reduces the possibility of an interest rate hike by the Federal Reserve.A bill that suspends the $31.4 trillion debt ceiling – and averts a catastrophic government default – sailed through the House of Representatives on Wednesday after a majority of both Democrats and Republicans backed the measure despite opposition from hardline members of both parties. The U.S. Senate will follow up by considering the bill.

David Klink, senior equity analyst at Huntington Private Bank, said the debt-ceiling deal seems to have been well-telegraphed, with investors – conditioned by the debt dramas of the past decade – knowing it was coming.

“So it was like, buy the rumor, sell the news,” Klink said.

The MSCI world equity index, which tracks shares in almost 50 countries, added 1.1%. The pan-European STOXX 600 index rose 0.78% after closing at a two-month low in the previous session.

On Wall Street, all three main indexes rose, led by stocks in technology, communication services, healthcare, industrials and financials.

The Dow Jones Industrial Average rose 0.47% to 33,061.57, the S&P 500 gained 0.99% to 4,221.02 and the Nasdaq Composite added 1.28% to 13,100.98.

U.S. Treasury yields fell after Labor Department data on Thursday showed U.S. worker productivity slumped in the first quarter, indicating an easing of the tight labor market and reducing the likelihood of a rate hike.

The yield on benchmark U.S. 10-year Treasury notes dropped to 3.607%, while the yield on the 30-year Treasury bond was down at 3.826%.

The U.S. dollar drifted from a two-month high as investors trimmed bets based on lower rate hike expectations, while the euro recovered from a two-month low after European Central Bank (ECB) President Christine Lagarde said inflation remained too high and further policy tightening was necessary.

The dollar index fell 0.586%, with the euro up 0.68% to $1.0761.

Oil prices were buoyed by optimism from the passage of the debt ceiling bill that could underpin consumer demand despite reports that U.S. crude inventories rose by about 5.2 million barrels last week.

Brent crude futures settled up 2.3% to $74.65 a barrel, their biggest daily gains since May 17. U.S. West Texas Intermediate crude (WTI) climbed 3% to settle at $70.10 a barrel, recording its biggest daily gains since May 5.

Gold gained nearly 1% to a more than one-week peak on Thursday, as the dollar tumbled. Spot gold added 0.8% to $1,978.01 an ounce, while U.S. gold futures gained 0.73% to $1,978.30 an ounce.

(Reporting by Chibuike Oguh in New York; Editing by Nick Zieminski, Will Dunham and Richard Chang)

---