* Treasuries surge; long US bond yields at Feb 2009 lows
* Swiss franc, gold also up on flight to safety
* Stocks dive after Aug U.S. jobs show no growth from July (Updates with market moves)
By Barani Krishnan
NEW YORK, Sept 2 (Reuters) - Unexpectedly weak U.S. job numbers for August on Friday reinforced fears of recession, driving investors out of stocks and into the safety of bonds, gold and the Swiss franc.
World stocks fell nearly 2 percent after the U.S. Labor Department said employers added no new jobs in August and July's figure was revised lower. For more see [ID:nOAT004865].
The biggest reaction came in the U.S. Treasuries market, where the yield on the 30-year bond hit two-and-a-half-year lows on growing bets the dismal data will compel the Federal Reserve to take additional steps to boost the economy.
After a treacherous August of out-sized market volatility, the jobs report feeds worries that September could bring more of the same, especially if economic data rekindles fears of another recession.
"There are a lot of confidence issues in the marketplace; the jobs number only made things worse," said Sal Arnuk, co-manager of trading at Themis Trading in Chatham, New Jersey.
There is now a growing expectation the Federal Open Market Committee will extend the maturity of its $1.65 trillion Treasuries holdings at its Sept. 20-21 policy meeting. [US/] The intended effect would be to push rates lower throughout the economy in an attempt to ignite consumer demand.
In a note, Goldman Sachs economists said they expect the Fed will announce plans to lengthen the average maturity of its portfolio, "with sales of relatively short-dated Treasuries and purchases of relatively long-dated Treasuries."
Gold futures
The 30-year bond
After two hours of trading. Wall Street's Dow Jones industrial average <.DJI> was down 178.99 points, or 1.56 percent, at 11,314.58. The Standard & Poor's 500 Index <.SPX> was down 20.81 points, or 1.73 percent, at 1,183.61. The Nasdaq Composite Index <.IXIC> was down 39.62 points, or 1.56 percent, at 2,506.42.
"This (jobs) report will certainly strengthen the case for the doves on the committee going into the next meeting later this month,' said Millan Mulraine, senior U.S. macro strategist with TD Securities in New York.
Benchmark 10-year Treasury notes
In Treasury Inflation Protected Securities trading, the yield on 10-year TIPS
The Swiss franc
World stocks also slumped while core government bonds rallied with U.S. Treasuries.
The MSCI world equity index <.MIWD00000PUS> lost 2.6 percent while European stocks <.FTEU3> were down 2.9 percent. Emerging stocks <.MSCIEF> fell 1.4 percent.
Bund futures
Crude oil futures in New York
The euro