UPDATE 9-Oil prices steady as equity markets weigh, geopolitics support

* Dollar up on U.S. August jobs report; trade tensions linger

* S&P 500 drops as strong jobs data stoke U.S. rate hike fears

* U.S. diesel, gasoline stocks up after lackluster driving season

* U.S. oil drillers cut rigs for 2nd week in three -Baker Hughes

(Adds CFTC data, Iraq news) NEW YORK, Sept 7 (Reuters) - Oil prices were steady on Friday, with U.S. crude slipping on weak global equity markets while Brent inched up on geopolitical factors, including violent protests in Iraq. U.S. West Texas Intermediate (WTI) crude futures settled down 2 cents at $67.75 per barrel. Brent crude futures settled up 33 cents at $76.83 a barrel. For the week, U.S. crude lost almost 3 percent, while Brent was down 0.8 percent. Geopolitical developments lent Brent some support, as protests in the southern Iraqi city of Basra heated up and the civil war in Syria threatened to escalate, analysts said.

"The situation in Basra has really flamed up ... that's giving Brent some help here," said John Kilduff, partner at Again Capital in New York. In post-settlement trading, Brent prices drifted higher after Iraqi protesters entered a 400,000 barrel per day oilfield facility operated by Lukoil and held two staff members hostage.

U.S. oil prices had gotten a boost early in the week as the approach of Tropical Storm Gordon forced the closure of Gulf of Mexico oil platforms and threatened Gulf Coast refineries. Speculators in the week to Sept. 4 raised their bullish bets on U.S. crude to the highest in a month, the U.S. Commodity Futures Trading Commission said on Friday. "The market got too juiced up before the tropical storm ... a lot of the weakness in the week (since) has been unwinding from that," said Phil Flynn, analyst at Price Futures Group in Chicago. The storm ultimately weakened and moved away from oil-producing areas and energy companies restarted operations shut as a precautionary measure. The dollar rose on Friday against a basket of other

currencies after the U.S. Labor Department's closely

watched employment report showed U.S. job growth surged in August. A stronger greenback makes it more expensive to buy dollar-denominated commodities like oil. Escalating trade tensions along with the jobs data, which raised concerns about the possibility of a quickening pace of U.S. interest rate hikes, pressured global equity markets. Wall Street's three major indexes all moved lower, while the

pan-European STOXX 600 had its worst weekly performance

since the end of March. At the same time, U.S. oil prices remained weighed down by official data showing that U.S. gasoline inventories had risen by 1.8 million barrels while distillate

stockpiles climbed 3.1 million barrels.

"This bears all the hallmarks of a disappointing summer driving season. As a result, the alarm bells are now ringing that a gasoline glut will persist for the foreseeable future," Stephen Brennock of London brokerage PVM said. The U.S. rig count, an indicator of future output, fell in the week to Sept. 7, according to data from General Electric's Baker Hughes energy services unit. U.S. energy companies cut rigs for the second week in three.

(Additional reporting by Ahmad Ghaddar in London and Henning Gloystein in Singapore; editing by Marguerita Choy, Bill Berkrot and G Crosse)