* U.S. jobs data and Hungary debt worries pressure markets
* World stocks down 0.9 percent
* Euro at four-year low vs dollar, below $1.20
* Strong German manufacturing data fails to rally markets
By Manuela Badawy
NEW YORK, June 7 (Reuters) - World stocks fell on Monday as strong German manufacturing data failed to improve sentiment after poor U.S. jobs data and debt worries centered around eastern Europe continued to drive fears about the global economic recovery.
The euro hit multi-year lows below $1.19, while safe-haven investments such as gold and U.S. Treasury securities were steady to higher as investors remained averse to risk amid concerns about European sovereign debt.
Data on Friday showing the U.S. economy generated fewer jobs than expected in May and comments from Hungarian officials suggesting the country could face a Greek-style debt crisis had triggered a flight to safety. []
Government officials on Monday, however, stressed that Hungary was not in the same situation as Greece and would meet budget deficit targets set in an aid deal with the International Monetary Fund and European Union.
Germany on Monday reported industrial orders jumped far more than expected in April, adding to signs that Europe's largest economy was on the path to durable growth. [] But the data did little to raise hopes of a healthy recovery in the world economy.
MSCI's all-country world stock index <.MIWD00000PUS> was down 0.9 percent, off its lows, and its emerging market counterpart <.MSCIEF> was off 2.2 percent.
"There is a lot of nervousness in the market. On the one hand we have the positive (German manufacturing) data, but there is also anxiety about Hungary keeping pressure on the market," said Heinz-Gerd Sonnenschein, equity markets strategist at Deutsche Postbank.
U.S. stocks bounced between positive and negative territory with little news or data to guide the market.
The Dow Jones industrial average <> was up 8.47 points, or 0.09 percent, at 9,940.44. The Standard & Poor's 500 Index <.SPX> was up 0.77 points, or 0.07 percent, at 1,065.65. The Nasdaq Composite Index <> was down 11.57 points, or 0.52 percent, at 2,207.60.
Investors continued Friday's sell-off after monthly U.S. jobs data disappointed, adding fewer jobs than expected of which a large portion were temporary hirings for the U.S. Census.
In the long-term however, the weak state of the labor market may help keep the U.S. economy out of another recession. Because companies have been reluctant to rehire or expand despite a growing economy, they have little need for further cutbacks even if demand falters.
In the currency market, European corporate demand helped lift the euro after it fell to $1.1876 <EUR=EBS> ,its weakest level since March 2006. But the euro remained below $1.20, a level pierced Friday after Hungary's warning about its deficit reminded investors of the severe debt problems plaguing some European countries.[]
The euro <EUR=> was down 0.14 percent at $1.1956 from a previous session close of $1.1973. Against the Japanese yen, the dollar <JPY=> was up 0.11 percent at 92.01 from a previous session close of 91.910.
"After Hungary's warning and weaker-than-expected U.S. jobs data on Friday, selling got a bit overdone," said Amelia Bourdeau, senior strategist at UBS in Stamford, Connecticut.
Hungary -- a member of the European Union but not the euro zone -- is of minimal importance on the global level, but there are concerns about exposure among leading banks if Hungary defaults or if the fall in the forint currency fuels a rise in loan delinquency among Hungarians who have borrowed heavily in euros and Swiss francs.
It also comes hard on the heels of worries about defaults in Greece and other southern euro zone members.
"Greece can't devalue or easily default on its debt, but presumably Hungary can, so it's a double-edged blade," said Michael Woolfolk, senior strategist at BNY Mellon in New York.
Euro zone governments will issue about 27.5 billion euros worth of new bonds this week, with Spain, Portugal and Italy all due to hold auctions. []
The pan-European FTSEurofirst 300 <> closed 1 percent lower, pressured by BP <BP.L>. The U.S. Coast Guard said the United States will be dealing with the oil spill from the April 20 rig explosion for another four to six weeks; BP firm plans to double the amount of oil it is capturing from its ruptured Gulf of Mexico well to 20,000 barrels per day. []
Adding to the pressure, Goldman Sachs downgraded the oil major to "neutral" from "buy."
U.S. Treasuries were little changed, keeping yields near their lowest in almost two weeks as bouncing stocks made it difficult to convince increasingly risk-averse investors to part with safe-haven government bonds in large amounts.
The benchmark 10-year U.S. Treasury note <US10YT=RR> was up 1/32, with the yield at 3.2022 percent. The 2-year U.S. Treasury note <US2YT=RR> was down 1/32, with the yield at 0.746 percent. The 30-year U.S. Treasury bond <US30YT=RR> was down 2/32, with the yield at 4.1361 percent.
Gold prices <XAU=> rallied to a three-week peak of $1,233.75 an ounce as investors took advantage of the dip in prices to buy the metal as a haven from risk in other markets. (Additional reporting by Steven C. Johnson in New York, Harpreet Bhal in London; Editing by Leslie Adler)
