* U.S. jobs data in focus <ECON>
* Equities fall, Europe off 1 percent
* Dollar slightly weaker against major currencies
By Jeremy Gaunt, European Investment Correspondent
LONDON, Aug 7 (Reuters) - Key data on the state of U.S.
joblessness loomed over financial markets on Friday, pushing
equities lower and weakening support for the dollar.
The U.S. non-farm payrolls report was due later in the day
(1230 GMT). It will provide a snapshot of job creation in the
world's largest economy and with it a hint at likely consumer
spending trends.
"Today the worry is bad news, recently the market has
ignored bad news and risen anyway ... now more sensible heads
will prevail," said Mic Mills, senior trader at spread betters
ETX Capital.
Economists polled by Reuters forecast that 320,000 jobs were
lost in July, an improvement on the 467,000 decline in June.
Global stocks were weaker, with MSCI's all-country world
index <.MIWD00000PUS> down around 1 percent and its emerging
market component <.MSCIEF> off 1.3 percent.
The pan-European FTSEurofirst 300 <> index of top
shares was down 0.8 percent, having surged 15 percent since July
10, propelled by better-than-feared company results.
Shares in Royal Bank of Scotland <RBS.L>, now state-owned,
slumped after it posted a one billion pound ($1.7 billion) loss
in the first-half of the year, hit by 7.5 billion pounds of bad
debts. []
Shares were not down everywhere. Earlier, Japan's Nikkei
average <> hit its highest close in 10 months, up 0.2
percent on the day.
"Generally speaking, the upward trend will likely continue,
backed by signs of a steady recovery in the economy, though I
expect some pauses along the way," said Mitsuo Shimizu, deputy
general manager of the sales promoting department at Cosmo
Securities.
EDGING LOWER
The dollar edged lower against a basket of currencies ahead
of the data and sterling remained under pressure after giving up
most of its gains this week when the Bank of England surprised
markets on Thursday by expanding its quantitative easing
programme. <GBP=> <EURGBP=>
"There is a sense that the market has become a little
exhausted with dollar weakness," said Daragh Maher, deputy head
of FX strategy at Calyon.
"Any disappointment (in the U.S. payroll figures) could
provoke a corrective spike higher in the dollar."
The dollar index <.DXY>, a gauge of its performance against
six major currencies, edged down 0.1 percent but was above
77.428 touched on Wednesday, a lowest point in more than 10
months.
The euro was 0.1 percent higher at $1.4370 <EUR=> after the
European Central Bank kept interest rates on hold at a record
low on Thursday. Sterling was off 0.1 percent at $1.6745.
The benchmark 10-year euro zone bond yield fell about two
basis points on the day to 3.365 percent as European shares
extended losses. <EU10YT=RR>.
(Additional reporing by Joanne Frearson and Tamawa Desai;
Editing by Ruth Pitchford)
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