* U.S., European shares dip as payroll report awaited
* Euro, pound, claw back versus dollar; ECB, BOE hold rates
* Copper tumbles in biggest one-day drop since November
NEW YORK, Jan 9 (Reuters) - U.S. stocks ended a volatile session little changed as investors were reluctant to make big moves ahead of the closely watched payroll report, while global markets dipped following recent steep gains.
Wall Street stocks moved between positive and negative territory throughout the day, a sign of conflicting views over the upcoming report.
While recent data has indicated improving economic conditions, Friday's payrolls report will be the first since the Federal Reserve announced a slowing of its stimulus program last month. There may be some increased expectations for the data to justify the market's recent rally. Strong economic indicators on Thursday, including an index on European sentiment and U.S. jobless claims figures, added some market optimism.
U.S. initial jobless claims fell more than expected in the latest week, while a euro zone sentiment index jumped to a 29-month high in December.
"There is a bit of hesitancy going into jobs report and the start of earnings season. The interest is still there for equities but with caution," said Robert Pavlik, chief market strategist at Banyan Partners LLC in Palm Beach, Florida.
The European Central Bank and the Bank of England both kept interest rates unchanged on Thursday, at 0.25 percent and 0.5 percent, respectively, but markets were on alert for any signs of future ECB monetary stimulus moves or shifts in the economic outlook.
The ECB's president, Mario Draghi, has been at pains in recent months to stress that the bank is prepared to ease its record low interest rates below 0.25 percent and test out other more unconventional policy options if necessary.
The Dow Jones industrial average was down 17.98 points, or 0.11 percent, at 16,444.76. The Standard & Poor's 500 Index was up 0.63 points, or 0.03 percent, at 1,838.12. The Nasdaq Composite Index was down 9.42 points, or 0.23 percent, at 4,156.19. The benchmark 10-year U.S. Treasury note was up 9/32, with the yield at 2.9596 percent.
U.S. investors were also looking ahead to the coming earnings season. After the market closed, Alcoa Inc reported revenue that topped expectations, though shares fell 3.5 percent in extended trading.
Separately, Macy's Inc jumped 7.6 percent to $55.80 a day after reporting strong holiday sales and giving a strong 2014 outlook.
"This is the 'show me' year in terms of earnings," said Bill O'Neill, head of wealth management research at UBS. "You have to see an improvement."
The FTSEurofirst-300 index of European shares fell 0.4 percent, while the MSCI International ACWI Price Index lost 0.3 percent. Tokyo's Nikkei 225 index slid 1.5 percent.
A sharper-than-expected slowdown in China's annual consumer inflation in December caused some anxiety in Asia, with China's Shanghai Composite Index falling 0.8 percent.
In currency markets, the pound was at $1.6481, up 0.2 percent against the dollar, while the euro was up 0.2 percent at $1.3605. The U.S. dollar index slipped 0.1 percent against a basket of currencies.
"Draghi sounded very cautious on the outlook for growth and said inflation would remain subdued," said Omer Esiner, chief market analyst at Commonwealth Foreign Exchange in Washington, D.C.
"By his own account, Draghi's language on accommodative policy 'showed firmer words,' which contrasted the outlook for Fed policy and sent the euro sharply lower this morning," he said.
Among commodities, gold was 0.2 percent higher following a two-day decline.
Copper, highly sensitive to the cooling economic outlook for top metals consumer China, tumbled 1.8 percent to $7,213 a tonne in its biggest one-day drop since November.
"I'm a bear on copper prices - I think $7,000 is a more sustainable level," said Helen Lau, a senior commodities analyst with UOB Kay Hian.
"The dollar will continue to strengthen because of U.S tapering, and China's economic growth is slowing down."
U.S. crude futures were flat at $92.37 a barrel while Brent crude slipped 0.6 percent to $106.52 per barrel. Both pared early gains after news that production was restarting at a key North Sea oilfield and as the market weighed Libya's resolve to get oil exports on track.