* MSCI world equity index down 0.6 pct at 297.35
* US rate expectations weigh on stocks, buoy dollar
* Gold, oil extend losses; bonds firmer
By Natsuko Waki
LONDON, Dec 7 (Reuters) - World stocks slipped on Monday
from last week's 14-month high while the dollar hit a five-week
peak as investors grew convinced U.S. interest rates could rise
soon after the previous session's robust jobs report.
A strong U.S. currency weighed on dollar-priced commodity
prices, with gold extending Friday's sharp losses having hit an
all-time high last week.
The dollar raced higher against a basket of major
currencies, having posted its biggest one-day gain this year on
Friday, after data showed on Friday that U.S. employers cut only
11,000 jobs last month, the smallest decline since December
2007.
Following the jobs data, investors are fully pricing in a
chance that the Fed might raise interest rates to 50 basis
points in August <FEDWATCH>.
"The market is pricing in more concrete evidence that the
Fed will start normalising policy," said Geoffrey Yu, currency
strategist at UBS.
"While the Fed is not in a position to start being hawkish
on policy, it may start being less dovish."
MSCI world equity index <.MIWD00000PUS> fell 0.6 percent.
The FTSEurofirst 300 index <> lost more than 1
percent.
Banks came under pressure in Europe on concerns Britain was
still considering some kind of windfall tax on bankers' bonuses.
A UK government source told Reuters on Friday that a tax on
banks was one revenue-raising option being considered by finance
minister Alistair Darling for his pre-budget report on Wednesday
and weekend newspapers were heavy with speculation on what form
this could take.
Emerging stocks <.MSCIEF> fell 0.6 percent. Dubai stocks
<> fell 5.9 percent to a 20-week low after the emirate's
government said it would not sell any assets to meet the
multi-billion dollar obligations of state-owned Dubai World.
Dubai shocked investors late last month by asking a
standstill on debt held by its conglomerate Dubai World,
triggering some sell-off in world stocks and other risky assets.
U.S. crude oil <CLc1> fell 1 percent to $74.68 a barrel.
Gold fell to $1,139.30 <XAU=>.
The dollar <.DXY> rose 0.3 percent against a basket of major
currencies, while it rose 0.6 percent to a five-week high of
$1.4761 per euro <EUR=>.
"(Post-data) reaction confirms our view that the current
dollar weakness will come to a rapid end once it becomes clear
that the Fed will end its zero rate policy," Commerzbank said in
a note to clients.
The bund futures <FGBLc1> rose 22 ticks after Friday's
sell-off following Friday's better-than-expected U.S. jobs
data.
(Additional reporting by Naomi Tajitsu; Editing by Andy Bruce)
