Dollar, global stocks fall on revived growth worries

NEW YORK (Reuters) - The dollar eased on Friday after an American labor market report suggested a go-slow approach to raising U.S. interest rates, while global equity markets fell on more weak data from Europe, adding to worries about tepid growth around the world.

Crude oil slipped under $50 a barrel as Brent, the global benchmark, headed for a seventh straight weekly loss. Gold rose and was set for its first weekly gain in four weeks as political uncertainty in Greece boosted demand for safe-haven assets.

Investors remain concerned about the impact of lower oil prices and how that might expose certain trades in the financial markets, said Jack Ablin, chief investment officer at BMO Private Bank in Chicago.

"The bottom line is the credit markets were at equilibrium with oil at $100; they can?t be at equilibrium at $50 within six months," Ablin said. "Somebody's going to cry 'uncle,' we just don't know who it is yet."

Data from Germany reflected weakness in the euro zone, which is still struggling to emerge from the economic crisis. German exports fell sharply in November and industrial output also declined.

U.S. job growth increased briskly in December and the jobless rate dropped to a 6-1/2 year low, but wages slipped, buttressing the case for the Federal Reserve not to rush to raise interest rates.

A five-cent drop in average hourly earnings, which nearly erased gains seen in November, took some shine off an otherwise mostly upbeat labor report, economists said.

Markets remain in tug-of-war as stock and bond investors over-react to economic data and global events, pushing U.S. equities to new highs and bond yields to record lows, said David Kelly, chief global strategist for JPMorgan Funds in New York.

"The only thing that is more bizarre than a lack of wage growth right now is the fact that in an economy that is growing as rapidly as this one is that you can have a 2 percent Treasury, that makes no sense at all," Kelly said.

The dollar traded at 118.85 yen , a loss of 0.67 percent on the EBS trading platform. The euro rose 0.3 percent to $1.1827.

MSCI's all-country world stock index , a measure of equity markets in 45 countries, fell 0.71 percent. The pan-European FTSEurofirst 300 index of leading regional companies fell 1.71 percent to 1,345.15.

On Wall Street, the Dow Jones industrial average fell 205.73 points, or 1.15 percent, to 17,702.14. The S&P 500 slipped 22.12 points, or 1.07 percent, to 2,040.02 and the Nasdaq Composite lost 48.06 points, or 1.01 percent, to 4,688.13.

U.S. Treasury debt prices rose on the view rates are on hold. Perceived odds on the Fed raising rates by September fell to 52 percent, according to CME Fed watch, which tracks futures contracts. That was down from 60 percent before the jobs data.

The benchmark 10-year note traded up 21/32 in price to yield 1.9449 percent, according to Reuters data.

In Europe, government bond yields in the euro zone were just above record lows. About a quarter of the euro zone bond market now yields less than 10 basis points, while German bonds with maturities of up to five years are yielding zero or less.

Yields on 10-year Bunds , which set the standard for the bloc's borrowing costs, fell to 0.488 percent.

Copper prices slipped to 4-1/2-year lows on concerns about oversupply after inventories climbed and worries about global growth, especially in top metals consumer China.

(Reporting by Herbert Lash; Additional reporting by Chuck Mikolajczak in New York; Editing by Dan Grebler)