GLOBAL MARKETS-Dollar weakens on US jobs data, stocks flat

                                
 * US jobs report shows surprise drop in non-farm payrolls
                                
 * Dollar under fire as policymakers meet in Washington
                                
 * Yen at fresh 15-year high, euro flat versus greenback
                                
 By Daniel Bases
                                
 NEW YORK, Oct 8 (Reuters) - The eroding U.S. labor market
led to a 15-year low for the U.S. dollar versus the yen but
left global share prices listless as investors felt hemmed in
by currency talks in Washington and probable economic stimulus
from the Federal Reserve.
                                
 U.S. government bond prices rose modestly as U.S. non-farm
payrolls showed a surprise drop of 95,000 last month, according
to government data. But the expectation the Fed will pump more
cash into the economy via quantitative easing raised inflation
concerns. For details, see [ID:nN08205203].
                                
 "The overall change (in payrolls) is really bad and is
probably enough to convince the Fed to engage in quantitative
easing," said Mark McCormick, currency strategist at Brown
Brothers Harriman in New York.
                                
 The weaker greenback spurred spot gold higher but not
enough to match Thursday's record $1,364.60 per ounce, while
oil prices gained ground as well. Global stock gauges were
little changed.
                                
 A brewing currency war has investors caught in a cross-fire
  while the world's finance ministers and central bankers meet
in Washington to try work out a solution among themselves to
soothe trade tensions and avoid scuttling a nascent global
economic recovery with trade protectionism. [ID:nN07213765]
                                
 The officials are meeting for this weekend's International
Monetary Fund and World Bank meeting. [ID:nN07222462]
                                
 In late morning, the Dow Jones industrial average <.DJI>
was up 50.93 points, or 0.47 percent, at 10,999.51. The
Standard & Poor's 500 Index <.SPX> was up 5.16 points, or 0.45
percent, at 1,163.22. The Nasdaq Composite Index <.IXIC> was up
10.12 points, or 0.42 percent, at 2,393.79..
                                
 Shares of aluminum producer Alcoa Inc <AA.N> rose 5.9
percent to $12.92 after reporting late Thursday a lower
quarterly profit, but said global markets were strengthening.
                                
 In Europe, the FTSEurofirst 300 <.FTEU3> index of top
European shares was little changed at 1,070.56.
                                
 The banking sector was a drag on the index. Barclays
<BARC.L> fell 2.19 percent after the main Middle East investor
who pumped billions of pounds into it effectively sold a chunk
more shares to lift his profit on the deal to over $3 billion.
[ID:nLDE6970IX]
                                
 MSCI's All-Country World index <.MIWD00000PUS> was 0.5
percent higher while the Thomson Reuters global stock index
<.TRXFLDGLPU> climbed 0.95 percent.
                                
 Japan's Nikkei stock index <.N225> fell 0.99 percent.
                                
 CURRENCY COUNTDOWN
                                
 The start of the Washington meetings has been dominated by
the policymakers talking about taking measures to avoid a
knock-down trade protectionist brawl.
                                
 At the heart of the matter is long hoped for global
economic rebalancing and the ugly underside of
'beggar-thy-neighbor' tactics governments can employ to protect
their export economies by keeping their currencies weak.
                                
 Japan, whose export-led but stagnant economy, has said it
will continue to intervene to curb a strong yen if necessary.
China has rebuffed calls from the West to let its currency rise
faster but allowed it to firm on Friday to its highest against
the dollar since a revaluation in July 2005.
                                
 The U.S. dollar fell 0.61 percent to 81.83 yen <JPY=>,
hovering just above the 15-year low of 81.71.
                                
 Jean-Claude Juncker, the chairman of euro zone finance
ministers, said the euro exchange rate against the dollar was
too strong at $1.4000 as the dollar did not reflect U.S.
economic fundamentals. That prompted the euro to erase gains
against the dollar to trade nearly unchanged at $1.3932 <EUR=>.
[ID:nWEA1610] [ID:nN08212788]
                                
 "Juncker has turned the market with comments about how he's
not happy with the euro reaching $1.40,' said Michael Woolfolk,
senior currency strategist at BNY Mellon in New York.
                                
 "This adds to concern about competitive devaluations,
particularly since foreign exchange will be discussed at
official IMF meetings this weekend."
                                
 Concerns that a stronger euro <EUR=> may weigh on the pace
of Europe's economic recovery, meanwhile, were fueled by German
exports falling in August for the second consecutive month and
narrowing the trade balance. [ID:nLDE6970A5]
                                
 Bund futures pared losses after Friday's U.S. payrolls
report, rising to 131.82 from 131.64 on Thursday.
                                
 The jobs data helped lift benchmark 10-year U.S. Treasuries
12/32 of a point in price, pushing the yield down to 2.34
percent <US10YT=RR>. The U.S. bond market will be closed on
Monday for Columbus Day.
                                
 Spot gold prices <XAU=> rose $15.05 to $1,347.70, while
crude oil <CLc1> gained $1.12 to $82.79 per barrel.
 (Additional reporting by Jeremy Gaunt, Brian Gorman, Chuck
Mikolajczak, Nick Olivari, Vivianne Rodrigues, Steven C
Johnson; Editing by Kenneth Barry)