* World equity index <.MIWD00000PUS> down 0.98 pct
* Dollar index steady above 77 <.DXY>
* Investor caution ahead of U.S. employment report
By Tamawa Desai
LONDON, Oct 2 (Reuters) - World stocks fell and the U.S.
dollar broadly held firm on Friday as doubts grew about the pace
of economic recovery and the week's major data on U.S. jobs
loomed large.
European shares tumbled at the open, following steep losses
in Asia and on Wall Street overnight as investors moved to the
relative safely of bonds.
Markets were on edge ahead of U.S. non-farm payrolls, due at
1230 GMT, fearing more disappointing news after a report on
Thursday showed U.S. manufacturing growth was slower than
expected in September. []
The MSCI world equity index <.MIWD00000PUS> fell 0.98
percent to 278.78, the second straight day of decline after
rising 17 percent in the third quarter which ended Wednesday.
European shares <> were down 1.0 percent in early
trade after tumbling 1.6 percent on Thursday to hit a three-week
closing low.
The index, which posted its best quarterly performance in
nearly 10 years in the last quarter, was on track for a third
day of losses.
"We have been waiting for a correction for quite a while,"
said Heino Ruland, strategist at Ruland Research, in Frankfrut.
"The third quarter performed pretty strongly. With the
beginning of the fourth quarter, we have to realise that the
economy is by far not in the shape which the performance of the
equity market would suggest."
ASIA SLIDES
Shares in Tokyo's Nikkei average hit a two-month closing low
on Friday, falling 2.5 percent or 246.77 points to 9,731.87
<>. The average slid 5.2 percent on the week for its
biggest weekly drop in about three months.
Toyota Motor <7203.T> and Honda Motor <7267.T> shed more
than 3 percent and concerns about the strength of the yen <JPY=>
added pressure as Toyota President Akio Toyoda said it would be
difficult for the auto giant to return to profit while the
dollar was weak. []
Trade across Asia was quieter than usual with markets in
China, India and South Korea closed for public holidays.
U.S. Treasuries rose, with the yield on benchmark 10-year
notes falling to 3.16 percent <US10YT=RR>, their lowest in more
than four months and down 2 basis points from late U.S. trade.
Economists polled by Reuters estimate the U.S. economy shed
180,000 jobs in September, fewer than the 216,000 jobs lost in
August, while unemployment rose to 9.8 percent in September from
9.7 percent in August. []
But Goldman Sachs called for even bigger job losses on
Thursday, saying it now sees non-farm payrolls falling 250,000
from its previous estimate of 200,000 after recent weak data.
A figure out of line with forecasts either way is likely to
have dramatic market impact.
The dollar index, which tracks the performance of the
greenback versus a basket of six other major currencies, held
steady above 77 <.DXY>.
"For today, it's all about being square, not being too
aggressive on positioning," said Roberto Mialich, FX strategist
at Unicredit in Milan, adding that the dollar will "perversely"
benefit from falling U.S. stocks and weak jobs data.
U.S. crude oil futures <CLc1> fell more than one percent
below $70 a barrel as worries over the West's talks with Iran
about the OPEC member's nuclear plans eased. []
Gold <XAU> edged up to hover just under $1,000 an ounce.
(Additional reporting by Dominic Lau and Jamie McGeever in
London, Susan Fenton in Hong Kong, editing by Mike Peacock)
