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GLOBAL MARKETS-Stocks fall on dimming prospects for sharp U.S. rate cut

April Joyner

* GRAPHIC-European stocks: https://tmsnrt.rs/2YHThhg

* Strong U.S. payrolls temper Fed rate cut expectations

* Deutsche Bank shares drop on overhaul move

* Turkish lira slides on central bank shakeup

(Updates to mid-afternoon in U.S. markets) NEW YORK, July 8 (Reuters) - Stocks around the world fell on Monday after strong U.S. job gains tempered expectations the Federal Reserve will deliver a large interest rate cut at the end of July. U.S. equities continued their slide from Friday, when the June employment data was released, as hopes of a steep Fed rate cut faded. U.S. stocks were also weighed by losses in shares of

Apple Inc , following an analyst downgrade, and BoeingCo , after a Saudi Arabian airline said it would not

proceed with an order for its jets.

European stocks edged lower. The STOXX 600 endeddown 0.1%, as Deutsche Bank's announcement that it

would cut 18,000 jobs around the world in a restructuring plan dragged down bank shares.

MSCI's gauge of emerging market equities fell 1.3%

as Asian shares closed lower and the dollar edged up in reaction to dampened expectations for a sharp Fed rate cut. U.S. investment bank Morgan Stanley's decision to reduce its exposure to global equities due to misgivings about the ability of policy easing to offset weaker economic data also weighed on investor sentiment. U.S. Treasury debt yields fell, after gaining on Friday in response to the U.S. employment data. Federal Reserve Chairman Jerome Powell is scheduled to give testimony on monetary policy before Congress on Wednesday and Thursday, which some investors expect will provide clues regarding the likelihood of a rate cut from the U.S. central bank when it meets at the end of the month. "It's definitely an opportunity for him to set or reset the expectation for a 25-basis-point rate cut," said Michael O'Rourke, chief market strategist at JonesTrading in Greenwich, Connecticut. "The strong jobs report is an indicator that they shouldn't lower rates."

The Dow Jones Industrial Average fell 129.76 points,or 0.48%, to 26,792.36, the S&P 500 lost 16.54 points, or0.55%, to 2,973.87 and the Nasdaq Composite dropped

68.52 points, or 0.84%, to 8,093.28.

MSCI's gauge of stocks across the globe shed

0.63%.

Benchmark 10-year U.S. Treasury notes last rose

5/32 in price to yield 2.0268%, from 2.044% late on Friday.

CURRENCIES AND GEOPOLITICS

In currency markets, the Turkish lira weakened 2.0%

against the dollar after President Tayyip Erdogan dismissed central bank Governor Murat Cetinkaya, whose four-year term was due to run until 2020, and replaced him with his deputy, Murat Uysal. Erdogan sacked Cetinkaya for refusing the government's repeated demands for interest rate cuts, laying bare differences over the timing of cuts to revive the recession-hit economy.

The dollar index rose 0.08%, while the euro

dropped 0.09% against the greenback to $1.1214.

The British pound edged down 0.07% to $1.2514, after

hitting a six-month low against the dollar on Friday as a result of poor economic data and a rise in expectations that the Bank of England will cut interest rates. Geopolitics were in focus in oil markets following news on Sunday that Iran would boost its uranium enrichment in breach of a cap set by a landmark 2015 nuclear deal. On Monday Iran said it has passed the 3.6% cap and may enrich at even higher levels

U.S. crude futures rose 47 cents, or 0.8 percent, to$57.98 a barrel. Brent crude futures rose 15 cents, up a

0.2 percent, to $64.38 a barrel.

Spot gold dropped 0.2% to $1,397.41 an ounce as the

dollar rose.

(Reporting by April Joyner Additional reporting by Stephanie Kelly in New York, Tom Arnold in London; Editing by James Dalgleish and Leslie Adler)