Financial markets might have started the week beset by worries about Dubai’s debt problems but they ended it full of optimism that the US economic recovery was gathering pace.

The crucial turning point came, as it frequently has, from the US monthly employment report. This showed that 11,000 jobs were lost last month, far less than the expected 125,000, while the unemployment rate fell from 10.2 per cent to 10 per cent.

There were also substantial positive revisions to the prior two months’ data.

Rob Carnell, economist at ING, described the improvement in the report as “remarkable”.

“So remarkable, in fact, that we may take another month or two to fully believe it, if backed up by other data,” he said. “But, for now, markets cannot be blamed for switching fully back to ‘risk on’.”

Indeed, riskier assets such as equities, credit and commodities initially enjoyed strong gains on Friday as investors turned away from the perceived safety of government bonds.

Notably, the dollar also rallied – counter to its recent trend, following encouraging US economic releases – as interest rate expectations underwent a dramatic shift.

Ashraf Laidi, chief strategist at CMC Markets, said the last time a simultaneous rally in stocks and the dollar had occurred was in July – when the employment report showed the first drop in the jobless rate since April 2008.

“The dual improvement in unemployment and payrolls is exactly what the doctor must order for the consumer-led US economy in order for the Federal Reserve to take any meaningful steps into an exit strategy,” Mr Laidi said.

The Fed funds futures market brought forward its estimate of the likely timing of a US rate rise by a month, analysts said.

That added fuel to an intensifying debate over the outlook for global policy as divergent moves by several leading central banks took over from Dubai as the issue uppermost in investors’ minds.

“Recent newsflow has continued to support the view that policymakers are fully aware of the medium-term problems potentially brewing from lax monetary, and fiscal, policies, but are yet loath to advocate an alternative course of action given that securing growth remains their number one priority,” said Neil Mellor, of Bank of New York Mellon.

The Bank of Japan triggered much excitement after it said it was holding an unscheduled meeting, although its announcement that it would inject a further Y10,000bn into the banking system via short-term loans initially left many observers disappointed.

However, the yen subsequently retreated against the dollar, easing the pressure on exporters and triggering a strong rally in Japanese equities.

The European Central Bank, in stark contrast to its Japanese counterpart, set the stage for a gradual exit from its unconventional policies.

The ECB left its benchmark interest rate unchanged at 1 per cent but said it would phase out its six-month and one-year refinancing facilities and move to an index-based rate for future operations.

“With these steps, the ECB is light years ahead of the Fed when it comes to an unwinding of the extraordinary support programmes,” said Axel Merk, of Merk Investments.

Underlining the divergence in global policy was the Reserve Bank of Australia’s decision to raise interest rates, for a third successive month, by 25bp to 3.75 per cent.