GLOBAL MARKETS-Shares jittery over U.S. stimulus, BOJ talk crops yen
* European shares drop 1 pct, Wall Street seen lower
* Yen steadies after 6-month low vs dollar on BOJ talk
* Nikkei hits highest close in 6 years
* Aussie dollar edges to near 3-month low after RBA comments
* Gold stabilises after 2.6 pct slide overnight
By Marc Jones
LONDON, Dec 3 (Reuters) - World stocks tumbled for a second day on Tuesday with European markets taking their biggest fall since August, spooked by concerns that the United States may soon start cutting back its economic stimulus.
Upbeat U.S. economic data on Monday had bolstered the still-minority view that the Federal Reserve may start the process of turning off the taps on its huge bond-buying programme this month.
The uncertainty about the timing offset signs from Japan that it is ready to ramp up its stimulus efforts again. Political upheaval in Ukraine fed into general caution.
U.S. stock index futures pointed to a third straight day of falls for the S&P 500.
Many see March as most the likely time for the Fed to begin to trim the stimulus. But "the data shows the U.S. shutdown government has had little impact so the old story that the Fed might taper in December has gained traction again," said Philip Marey a U.S.-focused economist at Rabobank.
Turbulence rattled European shares for the second day on the trot with Paris's CAC 40 shedding 1.7 percent in its weakest day since August as the pan-regional FTSEurofirst sank 1 percent.
MSCI's world stock index, which tracks 45 countries, was down a more modest 0.25 percent, supported by early gains in Asia as talk of additional BOJ aid lifted Japanese stocks towards a six-year high.
But there was unease about Ukraine after protests against President Viktor Yanukovich's decision to move away from Europe towards Russia.
Yanukovich left Ukraine for a state visit to China on Tuesday as the cost of insuring Ukraine government debt against default jumped anew to leave it a whisker away from 2009 peak levels.
The European Central Bank and Bank of England both meet on Thursday with the ECB in particular focus after last month's surprise interest rate cut.
The euro had edged up to just over $1.3585 as U.S. trading gathered pace and was at a 5-year high versus the yen .
Euro zone debt also made ground as investors reacted well to a debt swap by Portugal aimed at getting Lisbon in shape for a possible return to borrowing markets next year. Portugal's bonds and stocks outperformed.
"Portuguese bonds are actually posting a rally, reflecting the fact that after this morning's exchange, next year's funding is going to be less challenging," Luca Cazzulani, strategist at UniCredit said.
Investors otherwise remained fixated on Fed, whose stimulus programme has helped drive this year's global rally.
U.S. 10-year Treasury yields, the benchmark for the world's borrowing costs, backed off from Monday's high of 2.8 percent to 2.77 percent.
Friday's nonfarm payrolls report will give the next cue for guessing when the Fed will start reducing its monthly $85 billion bond purchases.
"A drop in the unemployment rate from 7.3 percent to 7.0 percent would fan tapering fears, preventing U.S. Treasuries from reversing course even on a lacklustre 150,000 nonfarm payrolls," Societe Generale said in a note.
AUSSIE DOLLAR DOWN
The appeal of the dollar moved down with U.S. Treasury yields. It had earlier hit a six-month high of 103.38 yen with the yen also weighed down by the speculation about the Bank of Japan may expand.
According to officials briefed on the process, the bank is looking to go beyond its $70 billion-a-month bond-buying programme. Options include major purchases of stock-market-linked funds or other assets riskier than Japanese government bonds, the insiders said.
Despite robust export numbers and strong retail data, the Australian dollar dropped towards a three-month low after the Reserve Bank of Australia left rates on hold and said the currency was "still uncomfortably high."
Gold, meanwhile, traded near a five-month low amid the fears of an early end to Fed stimulus. Spot gold made a small rebound to $1,222 an ounce in early trading in London but remained close to its lowest levels since early July.
U.S. crude prices were flat at around $94 a barrel, after a 1.2 percent rise overnight. Brent was steady at $111.43.