GLOBAL MARKETS-Global stock index edges down, dollar gains after report dims view of US jobs market

By Sinéad Carew and Lucy Raitano

NEW YORK/LONDON, Sept 9 (Reuters) - MSCI's global equity index dropped slightly, while the dollar rose on Tuesday after an annual U.S. payrolls review revised employment levels through March sharply lower.

Safe haven gold pared some gains after earlier hitting a fresh record high for the third day in a row.

The U.S. Labor Department said on Tuesday that the economy likely created 911,000 fewer jobs in the 12 months through March than previously estimated, suggesting that job growth was already stalling before President Donald Trump's aggressive tariffs on imports.

While the report painted a less rosy picture of the U.S. jobs market, investors saw it cementing expectations that the Federal Reserve would start cutting interest rates this month. However, key inflation data is due to be released later this week before the Fed's next policy meeting.

"We'll get a little more data Thursday morning from the (Consumer Price Index) CPI but a meaningful reduction in labor growth furthers the narrative for the Fed rate cut cycle to begin later this month. That's keeping a better bid for equity markets overall this morning," said Michael James, managing director for equity trading at Rosenblatt Securities.

RATE CUT BETS INTACT

Bets on a 25 basis point cut, which were already priced in, were intact while the probability for a jumbo 50 basis point reduction remained at about 10%, as per CME's FedWatch tool.

On Wall Street at 10:46 a.m. the Dow Jones Industrial Average .DJI rose 30.77 points, or 0.07%, to 45,545.72, the S&P 500 .SPX fell 7.28 points, or 0.10%, to 6,488.76 and the Nasdaq Composite .IXIC fell 47.26 points, or 0.21%, to 21,752.92.

MSCI's gauge of stocks across the globe .MIWD00000PUS rose 0.40 points, or 0.04%, to 959.28 while the pan-European STOXX 600 .STOXX index fell 0.01%.

Uncertainty around the political landscape across various countries has rattled currency and bond markets in the past few sessions.

European markets brushed off French political upheaval after the government's collapse on Monday, as the event was already priced in.

French President Emmanuel Macron is seeking his fifth prime minister in less than two years after opposition parties united to kick out centre-right Prime Minister Francois Bayrou over his unpopular plans for budget tightening.

Investors were also mulling the resignation of Japan's Prime Minister, a heavy election defeat for Argentinian President Javier Milei's ruling party in local elections and the abrupt replacement of Indonesia's finance minister .

After tumbling more than 13% on Monday, Argentina's main stock index .MERV regained some lost ground on Tuesday, rising more than 2%.

Emerging market stocks .MSCIEF rose 13.29 points, or 1.04%, to 1,295.49. Earlier, MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS closed higher by 0.93%, to 679.78, while Japan's Nikkei .N225 fell 184.52 points, or 0.42%, to 43,459.29.

DOLLAR HIGHER

In currencies, the dollar index =USD, which measures the greenback against a basket of currencies including the yen and the euro, rose 0.17% to 97.57, with the euro EUR= down 0.24% at $1.1734.

Against the Japanese yen JPY=, the dollar weakened 0.36% to 146.98.

In Treasuries, the yield on benchmark U.S. 10-year notes US10YT=RR rose 2.8 basis points to 4.074%, from 4.046% late on Monday while the 30-year bond US30YT=RR yield rose 4 basis points to 4.7302% from 4.69%.

The two-year note US2YT=RR yield, which typically moves in step with interest rate expectations for the Federal Reserve, rose 3.2 basis points to 3.527%, from 3.495%.

In commodities, oil extended gains on Tuesday, rising by almost $1, after the Israeli military said it carried out an attack on Hamas leadership in the Qatari capital Doha in an escalation of the conflict in the region.

U.S. crude CLc1 rose 1.69% to $63.31 a barrel and Brent LCOc1 rose to $67.08 per barrel, up 1.61% on the day.

In precious metals, gold continued its record rally on expectations for a U.S. interest rate cut while investors looked ahead to inflation data due this week.

Spot gold XAU= rose 0.35% to $3,648.59 an ounce after hitting a high for the session so far of $3673.95 U.S. gold futures GCc1 rose 0.2% to $3,645.50 an ounce.