* Graphic: World FX rates in 2017 tmsnrt.rs/2egbfVh
* European stocks sag, FTSE heads for best week in 2 months
* Reports of grand jury, subpoenas in Russia saga weigh on dollar
* Markets await July non-farm payrolls later in session
* Sterling near nine-month low vs euro
By Marc Jones
LONDON, Aug 4 (Reuters) - Stocks, gold and most metals headed for a fourth week of gains on Friday, as fresh political woes for U.S. President Donald Trump and the prospect of a trade war with China kept the dollar depressed ahead of U.S. payrolls figures.
European markets underwhelmed, with Britain's FTSE 100 , Germany's DAX and France's CAC 40 flat. The FTSE was nevertheless on course for its best week in two months, having been boosted by the latest tumble in the pound versus the euro.
The dollar, meanwhile, was down at $1.1875 per euro and near the 2-1/2-year-low touched earlier this week. It has come under fresh pressure following reports that U.S. Special Counsel Robert Mueller has convened a 'grand jury' to investigate allegations of Russian interference in last November's presidential election.
Sources told Reuters that the jury has already issued subpoenas in connection with a June 2016 meeting that included U.S. President Donald Trump's son, his son-in-law and a Russian lawyer.
There was also the matter of monthly U.S. jobs data due later, which are normally a market mover as they are seen as a key gauge of economic health by the Federal Reserve.
Payrolls are expected to have increased by 183,000 jobs last month after surging by 222,000 in June, a Reuters survey of economists shows. The unemployment rate is seen falling one-tenth of a percentage point to 4.3 percent.
The dollar index, which has just recorded its worst run of monthly losses since early 2011, was 0.1 percent lower at 92.766 on the day and about 0.6 percent during a week in which it fell to a 15-month low of 92.548.
"We think things are overdone in terms of negative sentiment around the dollar," said PineBridge Investments fund manager Hani Redha.
"Overall we think global growth is going to be quite solid but we think the leadership is going to change back towards the U.S.," he added, saying Trump was also likely to get at least some fiscal stimulus measures through in the coming months.
In fixed income markets, Europe's 10-year benchmark government bond yield and U.S. equivalents were pinned near one-month lows of 0.45 and 2.23 percent respectively amid the U.S. political uncertainty.
German yields were set for their biggest weekly fall since April and U.S. yields -- a bellwether for global bond markets and which soared to two-year highs after Trump's election -- have been now falling for most of 2017 as the President's travails have cooled expectations for growth and inflation.
Investors were also increasingly wary about the prospect of a U.S. vs China trade war.
In a rare show of bipartisanship, three top Democratic senators have urged Donald Trump to "go after" China this week as he prepares an inquiry into Beijing's trade practices. Trump was expected to give a speech later but it has been postponed.
Economists think China would respond to any U.S. measures with counter-sanctions. China's blue-chip CSI 300 closed down 0.5 percent, notching its first three-day fall in almost two months.
MSCI's broadest index of Asia-Pacific shares outside Japan scored a modest 0.4 percent gain for the week though, as it added to its 24 percent rise for the year.
Japan's Nikkei ended the week little changed, dropping 0.4 percent on Friday as a stronger yen weighed. Wall Street was expected to start marginally higher, having seen the Dow index break through 22,000 points this week.
Back in Europe, sterling stayed near a nine-month low against the euro, still sapped by the Bank of England's cut to UK growth forecasts on Thursday which had also sideswiped rate hike expectations.
"With the central bank downgrading its UK GDP growth forecast for both this year and 2018, sterling is poised for further punishment down the road," Lukman Otunuga, research analyst at ForexTime, wrote in a note.
Venezuela's bolivar currency tumbled 18 percent against the U.S. dollar on the country's black market, ahead of the inauguration of a legislative superbody that the opposition says will give President Nicolas Maduro sweeping new powers.
In commodities, oil prices continued to be weighed down by persistent concerns about high crude supplies from both OPEC and the United States.
U.S. crude slipped 0.2 percent to $48.93 a barrel, after sliding 1.1 percent overnight, putting it on track for a weekly loss of 1.6 percent.
Global benchmark Brent also dropped 0.6 percent to $51.66, extending Thursday's 0.7 percent loss and headed for a 1.2 percent weekly fall.
Gold was steady at $1,269 an ounce and set to score and modestly weekly rise, which will be its fourth in a row.
Reporting by Marc Jones; Editing by Catherine Evans and Alister Doyle