GLOBAL MARKETS-China reserves cut extends risk rally, U.S. jobs data falls flat

* European stock markets flat or lower in early trade

* MSCI Asia-Pacific index up 0.4%, Nikkei gains 0.4%

* U.S. jobs disappointing headline number but wages up

* risk sentiment improves

* Safe-haven government bonds steady after selloff

* Emerging-market stocks and FX index have best week since June

* Second week of falls for gold

By Marc Jones

LONDON, Sept 6 (Reuters) - Stimulus from China capped a strong week for global share markets on Friday, as mixed U.S. jobs data kept bond buyers and dollar dealers on the back foot after the first significant selloffs in those assets in months.

Following a rollercoaster week dominated by political drama in Britain and Italy, trade war chatter, global monetary stimulus and Argentina's imposition of capital controls, traders had been enjoying a brief bout of calm.

Then, as China's markets were closing, the country's central bank said it was slashing the amount of cash that commercial banks must hold as reserves for the third time this year, in its latest bid to shore up the slowing economy.

That pepped up Europe's STOXX 600 index which had started in the red after rising to its highest in more than month on Thursday. Wall Street also opened its session higher, though the gains weren't quite as strong as futures markets had been signalling before the payrolls numbers.

They showed hiring slowed more than expected in August, with retail recruitment declining for a seventh straight month. At the same time however there were strong wage gains, which should help support consumer spending and keep the economy expanding.

Nancy Curtin, Chief Investment Officer of Close Brothers Asset Management, said: "The fundamentals of the U.S. economy remain robust on the consumer side,"

But "the Fed has made it clear that they are keen to sustain the expansion; hence any further weakness (in the economy) ... could provide a clear signal for further easing."

Even before the jobs figures, European bonds had steadied after their worst one-day selloff in more than a year. The euro was also standing firm at $1.1038 after the worst week for the dollar in a month.

"It feels to me like the air is coming out of it a bit," Societe Generale strategist Kit Juckes said, referring to the recent surge in volatility.

The closely watched U.S. non-farm payrolls report showed a 130,000 increase in jobs last month compared to a Reuters poll expecting a 158,000 rise. The economy also created 20,000 fewer jobs in June and July than previously reported though the overall unemployment rate was unchanged at 3.7%.

Surveys on Thursday had suggested the U.S. economy may be in better shape than investors have been fearing. Services activity accelerated in August and private employers increased hiring more than expected.

Despite the reassuring signs, bond markets still expect the Federal Reserve to cut interest rates this month.

POUND REBOUND?

Overnight, MSCI's broadest index of Asia-Pacific shares outside Japan added 0.6%, giving it a 2.4% weekly gain, its best week since mid-June.

It was helped by news the United States and China had agreed to hold high-level talks early in October, raising hopes their long trade conflict might be resolved or least be toned down.

The Shanghai Composite Index ended up 0.5% and Hong Kong's Hang Seng rose 0.6%, even though rating agency Fitch downgraded the latter city's credit rating after months of unrest.

Australian stocks gained 0.5%, South Korea's KOSPI climbed 0.2% and Japan's Nikkei advanced 0.5% too. Wall Street's main indexes inched up around 0.1% too after the Dow added 1.4%, the S&P 500 climbed 1.3% and Nasdaq rose 1.75% the previous session.

"The strong U.S. data are the main part of the latest turn in markets as they are key factors impacting equities and U.S. yields, therefore determining how long this 'risk on' phase will last," said Junichi Ishikawa, senior FX strategist at IG Securities in Tokyo.

Despite its broader struggles, the dollar stood at 107.04 yen after climbing to a one-month high of 107.235 overnight.

The pound eased to $1.23 from the near six-week peak of $1.2353 it had reached after Britain's parliament moved to block a UK departure from the European Union without a transitional agreement. It had fallen to a three-year low of $1.1959 midweek amid threats of a no-deal Brexit.

U.S. Treasuries kept moves tight after a busy last couple of days which have seen prices fall and their yields rebound from multi-year lows driven by bets on U.S. borrow cost cuts.

The 10-year Treasury yield was 1.57%, up from a three-year low of 1.428% in midweek, when soft economic data and Sino-U.S. trade worries stoked global recession concerns.

"The recent panic in markets was excessive. And if a sustained reversal of fragile sentiment gets under way, U.S. equities will test fresh record highs and a corresponding drop in bond prices will present a good bargain-hunting opportunity," said Eiichiro Tani, chief strategist at Daiwa Securities.

In commodities markets, Brent oil futures sank 1.5% to $60 per barrel. Brent had climbed to a one-month peak of $62.40 per barrel on Thursday after data showed U.S. crude stockpiles decline and the news about U.S.-China trade talks.

The flip side was a small rise in gold prices on the day although it was on track for a 1% weekly drop.

"The good economic news from the U.S. and the news of the restart of trade negotiations drove risk-on sentiment and in turn drove down demand for gold and other safe-haven assets," said SP Angel analyst Sergey Raevskiy. (Additional reporting by Shinichi Saoshiro in Tokyo; editing by Larry King and John Stonestreet)