GLOBAL MARKETS-Stocks retreat on Ukraine jitters, oil higher
* European shares off sharply on Ukraine, down 1.3 pct
* Dollar rises from four-month low, bond prices fall
* Oil up, gold futures lower
By Herbert Lash
NEW YORK, March 7 (Reuters) - A surprisingly strong U.S. jobs report on Friday sent bond and gold prices sharply lower and initially lifted equity markets, but mounting tensions over Ukraine led stocks in Europe and elsewhere to retreat, while U.S. shares traded near flat.
Diplomatic efforts to cool the crisis in Ukraine calmed markets earlier in the week, but as tensions rose over Russia's intervention in Crimea, investors tried to shield themselves from any potential confrontation before the weekend.
European blue chips exposed to Russia and Ukraine came under renewed pressure as Germany's DAX index - considered the most vulnerable to any fallout - fell 1.1 percent.
President Vladimir Putin rebuffed a warning from U.S. President Barack Obama over Moscow's military intervention in Crimea, saying on Friday that Russia could not ignore calls for help from Russian speakers in Ukraine.
Putin said in a statement after an hour-long telephone call that Moscow and Washington remain far apart, giving investors a reason to take money off the table before the weekend.
"People are a little bit nervous to go into the weekend with fully loaded long positions, given the ongoing Ukraine crisis," said Zeg Choudhry, head of trading at Northland Capital Partners in Ilford, Britain.
The FTSEurofirst 300 index of top European shares extended losses into the close, finishing down 1.3 percent at 1,326.70.
MSCI's all-country world equity index retreated to trade 0.4 percent lower after earlier trading just off peaks last seen at the end of 2007.
Stocks on Wall Street traded mostly flat, with the better-than-expected non-farm payrolls report pushing the benchmark S&P 500 index to a fresh intra-day high before it retreated.
The Dow Jones industrial average was up 24.03 points, or 0.15 percent, at 16,445.92. The Standard & Poor's 500 Index was down 0.87 points, or 0.05 percent, at 1,876.16. The Nasdaq Composite Index was down 23.37 points, or 0.54 percent, at 4,328.75.
U.S. Treasuries yields rose to the highest levels in six weeks after the February jobs report eased fears of an abrupt slowdown in economic growth and kept the Federal Reserve on track in reducing its monetary stimulus.
U.S. employers added 175,000 jobs to their payrolls last month after creating 129,000 new positions in January, the U.S. Labor Department said.
However, even as job growth accelerated sharply, the unemployment rate rose to 6.7 percent from a five-year low of 6.6 percent.
Benchmark 10-year Treasury notes dropped 18/32 in price, the yield rising to 2.81 percent, the highest since Jan. 23. It was last down 14/32 in price to yield 2.7879 percent.
The dollar rose from a four-month low. The dollar index , a composite of six currency pairs, traded 0.05 percent higher at 79.706. It earlier hit a bottom of 79.433 last seen on Oct. 29.
The dollar was up 0.25 percent against the yen at 103.32 yen, while the euro rose 0.12 percent to $1.3875.
Gold futures for April delivery fell 1.03 percent to $1,337.9 an ounce.
Global benchmark Brent crude oil was up 91 cents at $109.01 a barrel. U.S. crude was up $1.23 at $102.79.