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* Stocks rise after weaker-than-forecast U.S jobs data
* STOXX 600 index closes up 1.97 pct
* STOXX 600 ends at highest level since late May
* Utilities and miners outperform, but SBM Offshore plunges
By Sudip Kar-Gupta
LONDON, Sept 2 (Reuters) - European shares rose on Friday, with a leading regional equity index reaching its highest level since late May, as weaker-than-expected U.S jobs data led investors to pare back bets on an imminent U.S. interest rate hike.
The pan-European STOXX 600 index closed nearly 2 percent higher at 350.44 points, its best level since late May. The index also had its biggest one-day percentage gain since late June.
Europe's stock markets climbed after data on Friday showed that U.S. employment growth slowed more than expected in August.
That in turn meant traders were now pricing in about even odds for a December rate hike in the United States, with little chance of a rise before then. Before the report, traders saw better than even odds of a December rate increase.
The weaker-than-forecast jobs data also chimed in with tepid U.S. ISM factory growth figures published on Thursday, again reinforcing the expectation that the U.S. Federal Reserve would raise rates later rather than sooner.
Lower interest rates are typically good for stocks, as it means stocks offer comparatively better returns compared to bonds and cash, while it also means that companies listed on stock markets can have lower borrowing costs.
"So soon after a weak ISM reading, today's non-farm figures may pour cold water on the prospect of a rate rise later this month, despite the Fed's upbeat assessment of the economy in August," said Nancy Curtin, Chief Investment Officer of Close Brothers Asset Management.
The STOXX Europe 600 Utilities outperformed with a 2.8 percent rise, with France's Veolia advancing 4.9 percent as investors welcomed the company's issuance of a 1 billion Renminbi 'Panda' bond.
Mining stocks also outperformed, boosted by stronger copper prices.
Among stocks to lose ground was SBM Offshore.
SBM plunged 11.5 percent after prosecutors in Brazil rejected a deal allowing the Dutch energy services company to avoid prosecution for corruption related to contracts with oil group Petrobras.
The STOXX 600 remains down by some 4 percent so far in 2016.
Additional reporting by Danilo Masoni in Milan; Editing by Catherine Evans