* Wall St. ignores increase in U.S. jobs
* Worries about quicker Fed interest rate hike diminish
* U.S. Treasuries yields drop, gold bounces back (Adds Wall St drop, quotes, updates prices)
By Michael Connor
NEW YORK, Aug 1 (Reuters) - Global equities markets dropped for a fourth day on Friday, with Wall Street again slumping as investors shrugged off economic data showing solid improvement in U.S. labor markets.
Treasury prices rose, while the dollar moved lower.
U.S. stock indices slid about 0.5 percent, after the Standard & Poor's 500 index of top companies had its worst single-day drop since April on Thursday.
Confusion over Federal Reserve policy and ongoing tensions in Ukraine and Gaza were blamed for the U.S. sell-off. But Wall Street's losses may not be over, according to Nick Sargen, chief economist at Fort Washington Investment Advisors in Cincinnati.
"We're still not cheap by any means, and this could be the start of the 10 percent correction that's been long overdue," he said.
The Dow Jones industrial average fell 81.93 points, or 0.49 percent, at 16,481.37. The Standard & Poor's 500 Index was down 7.23 points, or 0.37 percent, at 1,923.44. The Nasdaq Composite Index was down 30.47 points, or 0.70 percent, at 4,339.31.
Losses were broad, with more than 70 percent of companies traded on both the New York Stock Exchange and Nasdaq lower. The only sectors to rise were defensive, with consumer staples up 0.7 percent and utilities up 0.2 percent.
The U.S. drop added to a global decline that began on Thursday with Wall Street. The MSCI All-Country World index , which has been off nearly all week, was down 0.64 percent at 420.35.
Japan's Nikkei index dropped to a one-week low and European shares were off 1.23 percent.
U.S. Treasury yields eased on publication of July's U.S. employment data, which included a sixth straight month of job additions over 200,000 in the world's biggest economy and soft hourly wage increases.
Benchmark 10-year notes were last up 17/32 in price to yield 2.50 percent, down from 2.58 percent before the jobs data was released.
"It's a Goldilocks report for an economy that is steadily expanding but not lifting off. It will reinforce for now the Federal Reserve's commitment to a gradualist policy approach," said Mohamed El-Erian, chief economic adviser at Allianz in Newport Beach, California.
U.S. job growth slowed more than anticipated in July and an unexpected rise in the unemployment rate pointed to some slack in the labor market, which was seen as giving the Fed room to keep interest rates low for a while.
The dollar, which has been climbing on hopes U.S. rates would rise sooner rather than later, moved lower. The U.S dollar index, which measures the greenback versus six major currencies, had traded near 10-month highs but was down 0.22 percent at 81.28.
"The dollar may have become a bit overly stretched," said Joe Manimbo, senior market analyst at Western Union Business Solutions in Washington. "We are going to have to see some wage growth to help justify these elevated levels for the greenback."
Gold jumped, with spot gold prices up 1 percent before settling back for a gain of 0.9 percent to $1.294.10 an ounce.
Brent crude oil fell more than $1 to hit a two-week low, slipping below $105 a barrel in its third straight day of losses as oversupply in the Atlantic basin and low demand outweighed worries over political tensions in the Middle East, North Africa and Ukraine. Brent crude fell to a low of $104.71, its weakest since July 15. U.S. crude futures fell 93 cents to $97.24 a barrel. (Reporting by Michael Connor in New York; Additional Reporting by Ryan Vlastelica in New York, Blaise Robinson in Paris, and Sudip Kar-Gupta in London; Editing by Dan Grebler)