Payrolls data buoy job creation hopes (Reuters)

(Reuters) - U.S. employers cut fewer jobs than expected during snow-battered February and the unemployment rate held steady at 9.7 percent, bolstering views the economy was on the brink of creating jobs.

 The Labor Department said on Friday nonfarm payrolls fell 36,000 and it was unclear how the severe snowstorms, which hit much of the country last month had impacted employment.

Analysts polled by Reuters had expected nonfarm payrolls to drop 50,000 last month and the unemployment rate to edge up to 9.8 percent. The median forecast from the 20 most accurate forecasters also saw payrolls falling by 50,000, while the 10 most accurate economists predicted a 70,000 decline.

"This does say, that we are now turning the corner on positive job creation," said Nigel Gault, chief U.S. economist at IHS Global Insight in Lexington, Massachusetts.

Jobs losses for December and January were revised to show 35,000 fewer jobs lost than previously reported.

U.S. stock indexes rose after the jobs report, while government debt prices fell sharply. The U.S. dollar gained against the euro and the yen.

Traders bet the stronger-than-expected number might encourage the Federal Reserve to begin lifting short term interest rates from near zero later this year.

Trading in U.S. short-term interest rate futures after the data was published showed investors thought the central bank would hike its benchmark interest rate by November.

"The emergency interest rate level is no longer warranted either for the markets or the economy," said Chris Rupkey, an economist at Bank of Tokyo-Mitsubishi in New York.

"The Fed is going to take out the scissors to its press statement. They will no longer be telling the global markets on March 16 that exceptionally low rates are needed for an extended period," he added, referring to the Fed's next policy-setting meeting.

Half of the job losses came from government workers, but that category is expected to see huge gains in the coming months as more workers are hired for the once-a-decade U.S. census. In February, 15,000 temporary census workers were hired.

Analysts had feared that the heavy snowstorms that hit large areas of the United States during the survey week for the employment report would cause a huge drop in payrolls.

However, the department said while the winter storms might have affected its employment count, it was difficult to quantify the net impact.