GLOBAL MARKETS-Markets on hold as U.S. jobs data draws closer
* Non-farm payrolls due, jump in U.S. yields underpins dollar
* Euro struggles at seven-week low against dollar
* Share markets steady, emerging markets make minor gains
* Oil hovers above $115 a barrel as Syria tensions persist
LONDON, Sept 6 (Reuters) - Financial markets were locked in tight ranges on Friday before jobs data that could usher in a cut in U.S. monetary stimulus, after a week of sharp rises in bond yields and the first gain for stocks in a month. The dollar held near a seven-week high against a basket of currencies, benchmark U.S. and German government bond yields hovered at their highest in 2-1/2 and 1-1/2 years respectively, while share markets in Europe were in a holding pattern. Nick Beecroft, senior markets analyst at Saxo Capital Markets, said the U.S. non-farm payrolls data, due at 1230 GMT and expected to show 180,000 new jobs according to a Reuters poll, should bolster the case for a cut in Fed bond buying. It's an impending move that has dominated attention for months and there is still a large amount of uncertainty about how the gradual removal of aid will affect the recovery of the world economy and its financial markets. "We are seeing an acceleration in activity in the United States," Beecroft said. "I remain negative on bonds, I now see 10-year treasury yields at the end of the year at 3-1/4 percent whereas previously it was 3 percent, and they will be heading towards 4 percent next year." Underlining expectations for an imminent turn in Fed policy, the euro held near a seven-week low after mildly dovish comments from the European Central Bank on Thursday. Falls of 1.45 percent on the Nikkei overshadowed minor share gains elsewhere in Asia while Britain's FTSE 100, Germany's DAX and Paris's Cac 40 were flat to 0.1 percent lower. Earlier gains this week left the pan-regional FTSEurofirst 300 up over 2 percent for the week, while MSCI's world share index, which tracks 45 countries, was on course for its first weekly gain in a month. "We are in a world now where good news is once again good news for equities." Beecroft added. "We can safely say that equities aren't really being spooked any more by the whole reduction in stimulus idea."
EURO, BUNDS UNDER PRESSURE The euro was wallowing at $1.3122, having slid one U.S. cent to be 0.7 percent lower on the week. As well as the pressure from the stronger dollar, investors sold the common currency after the ECB said on Thursday it stood ready to act if needed to bring money market rates down and help nurture a "very, very green" recovery. German industry output dropped by a more-than-expected 1.7 percent on the month in July, data showed on Friday, while Greece confirmed its economy shrank 3.8 percent in the second quarter, albeit the slowest pace since 2010. U.S. 10-year note yields were at 2.97 percent before the jobs data and start of New York trading, having hit 3 percent on Thursday for the first time since July 2011. This is roughly double where they were just four months ago and the move was buoying the dollar. The dollar index, measured against a basket of major currencies, was steady near a seven-week peak but the greenback dipped 0.4 percent to 99.70 yen after it popped above 100 yen overnight to levels not seen since late July. U.S. data this week showed a solid expansion in the services sector, while private employers added 176,000 jobs in August.
"After the data we have seen recently, expectations are that we will get a decent non-farm payrolls number and that would support the case for at least a light tapering," said Rabobank economist Philip Marey "The big elephant in the room is what is going to happen next. Tapering itself is just slowing down QE and we have done that before but going beyond that is really unchartered territory."
G20 Worries about reduced central bank support weighed on demand for gold as it hovered near a two-week low. In contrast copper was on course for its first weekly gain in three as upbeat data, particularly from China, lifted sentiment. Emerging markets have been the hardest hit in recent weeks The Group of 20 emerging and developed powers, gathered in St. Petersburg for a summit, struggled to find common ground over the turmoil caused by the prospect of a cut in stimulus. The summit also had to contend with whether to support U.S. military strikes in Syria, tensions that helped keep oil above $115 a barrel on Friday. Indonesia has had to raise interest rates to support the collapsing rupiah currency, while India's new central bank boss this week impressed some with an unexpectedly detailed plan that helped the rupee and stocks rally.