GLOBAL MARKETS-Stocks regain ground, Treasury near record low as US jobs data looms

* US yields near record low

* Payrolls could open bond yield "trapdoor"

* Stocks lacking clear direction

By Jamie McGeever

LONDON, July 8 (Reuters) - Stocks recovered some ground on Friday and U.S (Other OTC: UBGXF - news) . Treasury yields steadied close to this week's record low, marking their longest run of consecutive weekly declines in four years ahead of the latest U.S. unemployment report.

The data are expected to show solid job creation in June, but worries over the world economy following Britain's vote to leave the European Union and a deepening crisis in Italian banks continue to cloud investor sentiment globally.

The first measure of UK consumer confidence since the Brexit referendum two weeks ago showed the joint-steepest decline in morale since 1994, according to research company GfK (Swiss: GFK.SW - news) on Friday.

News (Other OTC: NWSAL - news) that snipers killed five police officers during rallies in the U.S. city of Dallas to protest against the fatal shooting of two black men this week also helped to keep markets in narrow ranges ahead of the June non-farm payrolls report.

The 10-year U.S. Treasury yield held steady at 1.385 percent , on course for a run of seven weekly declines - something not seen since mid-2012 - and close to Tuesday's record low 1.321 percent.

Europe's FTSEuroFirst 300 index of leading shares rose 0.3 percent to 1,280 points, still on track for its fifth weekly fall in six, MSCI (NYSE: MSCI - news) 's global stock index slipped 0.1 percent and Asian shares ex-Japan lost 0.2 percent .

Japan's Nikkei fell 1.1 percent as the yen strengthened, and U.S. stock futures pointed to a slight rise at the open on Wall Street of around 0.15 percent.

Market attention turned to the June jobs data, which are expected to show job growth of 175,000 last month and a slight pick-up in wage growth. But investors remained wary given the unexpected negative surprise in May.

"Brexit has made a (U.S.) rate hike in the near term extremely unlikely, with policy makers at the Federal Reserve wanting to see what the impact of this will be, both domestically and on financial markets," said Craig Erlam, Senior Market Analyst at Oanda.

"Markets seem convinced that another rate hike this year is off the table," he said.

YIELD CURVE FLATTENS

Though strong payrolls data would spark fresh speculation of a U.S. rate increase later this year, it would also trigger a fresh round of currency weakness and likely policy tightening in emerging markets.

Fed funds futures pricing shows that no U.S. rate increase is expected for at least a year, and that there is even a greater likelihood of a cut in the coming months than a hike.

In currencies, the dollar remained under pressure against the backdrop of low Treasury yields and the flattest U.S. yield curve in almost nine years. A flat curve - the narrowing of the difference between 10- and 2-year yields - is a harbinger of slowing growth, low inflation and low interest rates.

The dollar fell 0.3 percent against the Japanese yen to 100.50 yen, with the selling momentum once again fading on the approach to 100.00. The yen is often seen as a safe-haven currency in times of distress.

Japanese bond yields plunged to fresh record lows, with the 10-year yield touching -0.288 percent.

The euro was flat on the day at $1.1065 and sterling rose 0.5 percent to $1.2980, nearly two cents above its 31-year low of $1.2798 touched on Wednesday.

The pound is still on track for its third weekly decline and is down 13 percent against the dollar since the June 23 Brexit vote. That's on a par with the biggest declines in modern history among the world's top four currencies.

"If sterling had overshot then we would have come back to the mid-$1.30s. But we haven't," said Simon Derrick, head of global currency strategy at Bank of New York Mellon in London, adding that a fall to $1.20 or even below wouldn't be a surprise.

Oil prices recovered from Thursday's 5 percent slide to two-month lows on the back of weekly crude stocks data, but were still on course for a fall of around 7 percent on the week.

Brent crude futures were last up 0.6 percent at $46.65 and U.S. crude was up a similar amount at $45.41.

Spot gold edged down 0.2 percent on Friday to $1,355 an ounce but is set for its sixth consecutive weekly gain.

U.S.-based funds invested in precious metals attracted the most money since February, adding $2 billion to these funds in the latest week, according to Thomson Reuters (Dusseldorf: TOC.DU - news) ' Lipper data.

(Reporting by Jamie McGeever; Editing by Hugh Lawson)