GLOBAL MARKETS-Stocks slide as jobs data makes Fed move unclear

* Dollar mixed as data spurs uncertainty over Fed

* Oil slips as traders await rig count report

* Long-dated U.S (Other OTC: UBGXF - news) . bonds rally, short-dated notes slip (Add U.S. market open, byline, dateline; previous LONDON)

By Herbert Lash

NEW YORK, Sept 4 (Reuters) - Global equity markets tumbled and the dollar traded mixed on Friday after a U.S. jobs report for August kindled uncertainty over whether the Federal Reserve will raise interest rates in two weeks.

The headline number of a less-than-expected increase of 173,000 in non-farm payrolls was offset by the generally strong Labor Department report. The unemployment rate dropped to a near 7-1/2-year low and wages accelerated.

Also, the jobs count may have been flawed because of a statistical fluke that has often led to sharp upward revisions to payroll figures for August after initial weak readings.

Whether the Fed boosts rates in September or holds off for later, investors are preparing for an eventual raise, said Andrew Wilkinson, chief market strategist at Interactive Brokers (NasdaqGS: IBKR - news) LLC in Greenwich, Connecticut. A hike would be the U.S. central bank's first in almost a decade.

"Regardless of the global dislocation for equities, investors still seem to be preparing for a lift-off in the fed funds rate. There's not a lot to stop the onset of tightening at some point in the near future," Wilkinson said.

The equity sell-off suggests there is deleveraging as investors are forced out of positions they can no longer afford, while high volatility still "hasn't been swept under the carpet," Wilkinson said. "When the volatility indexes are running at those levels, be on the watch," he said.

The CBOE Volatility Index, Wall Street's so-called fear gauge, was up 6.9 percent at 27.17, or about double the rate it traded at all year until mid-August.

Major U.S. and European stock indices were poised to end the week lower. On Friday, the pan-European FTSEurofirst 300 index was down 2.17 percent at 1,397.80 points. MSCI (NYSE: MSCI - news) 's all-country world stock index was down 1.34 percent.

On Wall Street, the Dow Jones industrial average fell 202.03 points, or 1.23 percent, to 16,172.73. The S&P 500 slid 19.96 points, or 1.02 percent, to 1,931.17 and the Nasdaq Composite lost 25.18 points, or 0.53 percent, to 4,708.32.

U.S. medium- and long-dated Treasuries prices rose, while short-dated prices were slightly lower,

The benchmark 10-year Treasury rose 7/32 in price to yield 2.1438 percent, while the U.S. two-year note fell 1/32 in price to yield 0.7246 percent.

Strong average hourly earnings and a drop in the unemployment rate to 5.1 percent in the jobs report support the view that the Fed will hike rates at its policy-setting meeting on Sept. 16-17.

"They will probably raise rates just because they've been wanting to get off the zero bound, but I do think it's one of the closer calls," said Marc Bushallow, director of fixed income at Manning & Napier (NYSE: MN - news) in Rochester, New York.

The dollar index of major currencies traded rose 0.09 percent, while the dollar was down as much as 1 percent against the yen, and was last trading at 119.26 yen, or a loss of 0.67 percent.

Against the euro, the dollar was up 0.04 percent at $1.1116.

Crude futures fell as the oil market awaited a weekly reading on the U.S. oil rig count, after the U.S. jobs report failed to provide much direction.

Brent crude, the global benchmark for oil, was down 59 cents at $50.09 a barrel. U.S. crude's front-month slid 57 cents to $46.18. (Reporting by Herbert Lash; Editing by Chizu Nomiyama)