* MSCI world equity index down 0.4 percent at 283.45
* Washington's vote on bailout bill, U.S. jobs data eyed
* Dollar on track for biggest weekly gain in 16 years
By Natsuko Waki
LONDON, Oct 3 (Reuters) - World stocks fell to a fresh
three-year low on Friday as concerns grew that Washington's $700
billion bailout package might not be enough to prevent the U.S.
economy and the rest of the world from slowing down further.
U.S. House democratic leaders are optimistic the revised
rescue bill to tackle the financial crisis passed by the Senate
will clear the House of Representatives.
Even so, investors worry that recent data, yet to capture
the full shock to the labour market and consumer confidence from
September's series of bank failures and troubles, is already
showing the economy is nearing recession.
Investors also chose to stay on the sidelines ahead of a
closely watched U.S. jobs report due later.
"There are plenty of reasons for people not to have bets on
the table ahead of the weekend," said Jeremy Batstone-Carr, head
of private client research at Charles Stanley.
"The markets are going to be treacherous, we are close to
two big hurdles, the last of which (the vote on the bailout) is
after markets in Europe close... so it will take a tenacious
investor to make an investment on a day like today."
The FTSEurofirst 300 index <> fell 0.3 percent on the
day while MSCI main world equity index <.MIWD00000PUS> lost 0.4
percent, hitting its weakest since July 2005.
According to Standard & Poor's, all 52 world equity markets
declined in September, resulting in a $4.1 trillion loss. Since
January, world equity markets have lost $10.5 trillion.
The dollar <.DXY>, on track for its biggest weekly gain in
16 years, held near a one-year high against a basket of major
currencies.
"Paralysis is spreading across asset markets despite the
various attempts by authorities across the globe to shore up
confidence," Calyon said in a note to clients.
As a result, investors boosted their bets the Federal
Reserve would cut interest rates in October <FEDWATCH>. The
majority of them expect a half point cut, while there is a 14
percent chance of an aggressive 75 basis point rate cut.
However, two Federal Reserve officials -- St Louis Federal
Reserve Bank President James Bullard and Kansas City Fed chief
Thomas Hoenig -- said on Thursday that monetary policy was
already easy and inflation still a concern.
Although not voting officials at the Fed some traders said
their views could be reflective of those on the rate setting
board.
The December bund future <FGBLc1> rose 10 ticks. Two-year
euro zone government bond yield <EU2YT=RR> hit a 6-1/2 month low
of 3.24 percent, 100 basis points below the benchmark interest
rate.
Emerging sovereign spreads <11EMJ> widened 8 basis points
while emerging stocks <.MSCIEF> lost 1 percent.
U.S. light crude <CLc1> fell half a percent to $93.45 as
concerns over consumer demand grew.
Gold <XAU=> rose to $840.40 an ounce.
(Additional reporting by Simon Falush)
