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* Payrolls increase tops 200k for sixth month
* Worries about quicker Fed interest rate hike diminish
* U.S. Treasuries yields drop, gold bounces back
By Michael Connor
NEW YORK, Aug 1 (Reuters) - World stock markets traded lower on Friday following the previous session's Wall Street sell-off, while the dollar dipped after U.S. jobs data eased investors' worries Federal Reserve policymakers were tilting toward raising interest rates.
U.S. Treasury yields eased and gold prices jumped on July's U.S. employment data, which included a sixth straight month of job additions over 200,000 in the world's biggest economy and soft hourly wage increases.
"It's a Goldilocks report for an economy that is steadily expanding but not lifting off. It will reinforce for now the Federal Reserve's commitment to a gradualist policy approach," said Mohamed El-Erian, chief economic advisor at Allianz in Newport Beach, California.
Wall Street, whose Standard & Poor's 500 index of top American firms on Thursday had its biggest single-day drop since April, was mixed in early trading.
The Dow Jones industrial average was down 69.30 points, or 0.42 percent, at 16,494.00. The Standard & Poor's 500 Index was down 6.60 points, or 0.34 percent, at 1,924.07. The Nasdaq Composite Index was down 24.80 points, or 0.57 percent, at 4,344.98.
The MSCI All-Country World index was down 0.5 percent at 420.61. Japan's Nikkei index dropped to a one-week low and European shares were off 1.32 percent.
U.S. job growth slowed more than anticipated in July and an unexpected rise in the unemployment rate pointed to some slack in the labor market, which was seen as giving the Fed room to keep interest rates low for a while.
The dollar, which has been climbing on hopes U.S. rates would rise sooner rather than later, moved lower. The U.S dollar index, which measures the greenback versus six major currencies, had traded near 10-month highs but was down 0.32 percent at 81.195.
"The dollar may have become a bit overly stretched," said Joe Manimbo, senior market analyst at Western Union Business Solutions in Washington. "We are going to have to see some wage growth to help justify these elevated levels for the greenback."
Gold jumped, with spot gold prices up 1 percent before settling back for a gain of 0.8 percent to $1.293.80 an ounce.
U.S. Treasuries yields dropped, with benchmark 10-year notes last up 12/32 in price to yield 2.51 percent, down from 2.58 percent before the jobs data was released.
Despite the weaker-than-expected jobs data, investors remained cautious. A strong U.S. GDP figure earlier this week and conflict in Ukraine and the Middle East kept them on edge.
Brent crude oil fell to a two-week low, slipping below $105 a barrel as oversupply in the Atlantic basin and low demand outweighed worries over political tensions in the Middle East, North Africa and Ukraine. Prices were unaffected by the U.S. jobs data.
Brent fell $1.08 to $104.94. Brent lost 5.6 percent last month, its biggest fall since April 2013. U.S. crude futures fell 89 cents to $97.28 a barrel. (Reporting by Michael Connor in New York; Additional Reporting by Blaise Robinson in Paris and Sudip Kar-Gupta in London; Editing by Dan Grebler)