* May US payrolls growth seen highest in 26 years on census
* Rebounding equities may find support from US jobs number
* Euro stays near 4-yr low vs dollar on growth, bank risks
By Sujata Rao
LONDON, June 4 (Reuters) - World stocks hovered just off
two-week highs on Friday and the dollar clung to recent gains
ahead of U.S. jobs data that is widely expected to show recovery
is gathering pace in the world's largest economy.
Analysts expect the data, due at 1230 GMT, to show the
highest U.S. jobs growth last month since 1983, adding to other
upbeat economic reports this week.
A Reuters poll forecast U.S. payrolls data will show 513,000
jobs were created in May [], the fifth straight
month of gains. Some expect an ever bigger number, allowing
markets to continue their week-long rally.
MSCI world stocks <.MIWD00000PUS> were 0.12 percent up by
0815 GMT, just off the two-week highs hit in the previous
session. They have gained one percent so far this week after May
saw a 9 percent fall, fuelled by escalating euro zone worries.
European stocks <> rose 0.7 percent to a new two-week
high. Energy stocks jumped, led by a 4 percent rebound in BP
<BP.L> which said it had made some progress in capturing oil
gushing from its ruptured deep sea well. []
Over the past week, global equity markets and U.S. Treasury
yields have recovered nearly a quarter of the losses incurred
over the previous two months when the European sovereign debt
crisis triggered a scramble out of risk.
But analysts note that over two-thirds of the new jobs are
likely to be temporary hires for the U.S. government census. And
worries over euro zone growth and banks continue to overhang the
market, acting as a check on gains.
"If the payrolls figure is good, it'll support stocks on
both sides of the Atlantic. But this could be short-lived in
Europe, where stimulus plans have not been enough to kick-start
growth," said Christian Jimenez, fund manager and president of
Diamant Bleu Gestion, in Paris.
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For a graphic showing changes in non-farm payrolls, click
http://r.reuters.com/dyr28k
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DOLLAR REMAINS IN FAVOUR
The dollar had hit a four-year high against the euro on
Tuesday and stayed close to that level. The euro has lost 17
percent from early 2010 highs and at 0830 GMT it was trading
with small gains against the dollar at $1.2200 <EUR=> [].
Fears about tougher funding conditions in Europe and the
impact of spartan fiscal policy on growth may keep a lid on the
nascent revival in risk taking and keep investors favouring the
greenback and U.S. Treasuries.
Markets were spooked on Thursday by comments from a leader
of Hungary's new ruling party who said the country's finances
were in much worse shape than previously expected, prompting a
2.5 percent slide in the forint currency. []
"The dollar continues to attract safe-haven buying on the
back of continued concern in the euro zone about sovereign debt
and credit market liquidity, with European banks remaining
extremely nervous with respect to their lending between each
other," said Michael Hewson, analyst at CMC markets.
Reinforcing this are signs Chinese exporters are
increasingly demanding payment in dollars. [].
The dollar also rose against the yen, touching a two-week
high at 92.87 yen <JPY=>. Speculation that Japan's next prime
minister will be more hawkish against yen strength has spurred
traders to cut their bets on the yen this week. []
But prospect of a leader who may keep the yen weak was seen
as a plus for exporters, helping Tokyo's Nikkei share average
<> post its biggest single-day rise in six months on
Thursday. It finished 0.1 percent down on Friday.
Oil prices slipped off three-week highs as investors
remained doubtful that rising U.S. demand and falling stockpiles
will be enough to counteract the European debt crisis.
(Additional reporting by Neal Armstrong in London and Blaise
Robinson in Paris, editing by Mike Peacock)
