* Dollar at 4-week high vs yen, pound at 31-year low
* Oil prices gain, stay near four-month highs
* Wall St flat, Europe equities slip
* U.S. jobless claims fall; focus on Fri payroll report
(Updates with opening of U.S. markets; changes dateline,
By Lewis Krauskopf
NEW YORK, Oct 6 The U.S. dollar strengthened on
Thursday, pressuring gold prices, as strong labor market data
gave support to a possible hike in U.S. interest rates later
U.S. Treasury yields rose to three-week highs, ahead of the
closely watched U.S. jobs report due out on Friday. In an
encouraging sign for the labor market, data on Thursday showed
the number of Americans filing for unemployment benefits
unexpectedly fell last week to near a 43-year low.
Oil prices continued to climb, with U.S. crude breaking
through $50, on growing expectations for the world's biggest
producers to agree to cut supply, and after a report showed a
big drop in U.S. inventory levels a day earlier.
Wall Street was little changed, as energy sector gains
countered a drag from Wal-Mart Stores, which tempered
its profit expectations.
The U.S. currency rose to its highest against the yen
in a month, and pinned sterling firmly to a three-decade
low on worries about Britain's exit from the European Union.
Against a basket of currencies, the greenback gained 0.4
"By and large the dollar is continuing to trade well," said
Societe Generale strategist Alvin Tan. "Expectations about the
Fed raising rates are edging up and that has been helped by the
good run of U.S. data."
Strong U.S. jobs numbers could cement expectations of a
Federal Reserve rate increase later this year and ripple through
markets. Economists polled by Reuters forecast nonfarm payrolls
to increase by 175,000.
Traders were betting on a 64 percent chance the Fed will
hike rates in December, up slightly from a day earlier,
according to the CME FedWatch website.
"If you look at the economic data for the past month, pretty
much across the board it's better and in some cases materially
better than expectations," said Walter Todd, chief investment
officer at Greenwood Capital Associates in Greenwood, South
Carolina. "All of that would seem to push the Fed to move."
In the U.S. equity market, the Dow Jones industrial average
fell 15.37 points, or 0.08 percent, to 18,265.66, the S&P
500 gained 1.13 points, or 0.05 percent, to 2,160.86 and
the Nasdaq Composite dropped 4.25 points, or 0.08
percent, to 5,311.77.
MSCI's gauge of stocks across the globe fell
Europe's benchmark German bond yield edged briefly back
above zero, reversing earlier falls, as a sell-off in the
British government bond market spilled over into the euro area.
Germany's 10-year Bund yield, the euro zone
benchmark, was last flat for the session and near zero percent.
Britain's 10-year gilt yield jumped nearly 10 basis
points to a three-week high.
Benchmark 10-year U.S. notes were last down 4/32
in price to yield 1.73 percent, up from nearly 1.72 percent late
Oil rallied to fresh four-month highs.
Brent crude futures rose 1.1 percent to $52.45 a
barrel. U.S. futures climbed 1 percent to $50.34 a
barrel, having broken above $50 for the first time since June.
Spot gold fell 1 percent to more than three-month
"A surprise on the upside (of the labor numbers) will make
market watchers expect an even higher probability of a rate
hike, and that could bring gold prices down," OCBC Bank analyst
Barnabas Gan said.
(Additional reporting by Marc Jones and Clara Denina in London;
Editing by Bernadette Baum)