* Europe nudges higher but stocks set for 1st weekly drop in six
* U.S. non-farm payrolls due; Wall St down overnight on oil slump
* China, Japan shut for holiday, return early next week
* Dollar not far from two-year high
* World FX rates in 2019 tmsnrt.rs/2egbfVh
* Asian stock markets: tmsnrt.rs/2zpUAr4
By Marc Jones
LONDON, May 3 (Reuters) - World stocks were battling to avoid their first weekly fall in six weeks on Friday, as investors waited to see whether key U.S. jobs data would give the Federal Reserve another reason to dismiss rate cut calls.
Traders were pinning hopes on Wall Street regaining its record highs later in the session if MSCI’s 47-country world index is to avoid ending its weekly winning streak.
Europe was doing its bit too, with earnings from HSBC and Societe Generale and a 7 percent leap to a record high for German sportswear maker Adidas’ shares helping the region’s main bourses move 0.2-0.8 percent higher.
The dollar was also trying to end the week on a firmer note having seen markets scale back bets on a U.S. rate cut. As well as the jobs figures, there are no less than eight Federal Reserve policymakers due to speak on Friday.
Bond and commodity markets remained largely on the backfoot, with most benchmark government debt yields up on the day and Brent oil slipping back towards $70 a barrel and its worst week in over two months.
Fund manager UBP strategist Koon Chow said it all pointed to a little bit of the steam coming out of the markets after a flying start to the year.
“For the last four months it has been the unwinding the extreme pessimism that had built up (last year)” he said, referring to trade war nerves and the slowdown in many of the world’s largest economies.
“So here we are now in search of the next big thing, and I think today, and for the last few weeks, it is a views and portfolio repositioning exercise.”
U.S. employment figures are due at 1230 GMT and are forecast to show 185,000 net new jobs were added in April, with the unemployment rate at a steady 3.8 percent.
A report by payrolls processor ADP on Wednesday showed U.S. private employers added 275,000 jobs last month.
A solid official reading later would bolster the notion the world’s biggest economy remains on track for its longest expansion ever, potentially further boosting the dollar and the prospects for corporate earnings.
Overnight Asian trading remained thin with traders in both Japan and China still enjoying holidays. Hong Kong shares climbed 0.4 percent , the Australian market gained 0.1 percent, while Korea’s KOSPI slipped 0.5 percent.
Wall Street’s major indices,, had given up an initial attempt to regain their record highs and closed in the red on Thursday, weighed down by energy shares.
Oil prices plunged again after U.S. crude production output set a new record, though the losses were capped by the intensifying political crisis in Venezuela and the stopping of Iranian oil sanction waivers by Washington.
U.S. crude was still in the red in early afternoon London trade, down 0.3 percent at $61.65 a barrel, while Brent slipped 0.5 percent to $70.42.
In the currency markets, the Australian and New Zealand dollars fell as speculators wagered both countries could see interest cuts next week.
The Aussie slipped below psychological support of $0.7000 overnight to its lowest since early January while the kiwi drifted closer to a recent five-month trough of $0.6581.
The weakness in the antipodean currencies also came as the U.S. dollar gained on remarks by U.S. Federal Reserve Chair Jerome Powell earlier this week that a recent weakness in inflation owed to “transitory” factors.
That led traders to start paring expectations for a Fed rate cut. Futures now imply about a 49 percent probability of an easing at year-end, down from 61 percent late on Wednesday, according to CME Group’s FedWatch program.
The dollar index held at 97.842, inching towards a two-year peak of 98.33 touched last week.
Against the Japanese yen, the dollar was little changed at 111.48 having spent the entire week in a tight 111.03-111.89 range, while the euro drooped to to $1.1155, although it was still stronger on the week.
“‘Sell in May and go away’. With the dollar strong at the moment and emerging markets performing on the soft side, today’s jobs data could well give that market adage a little more legs,” said Chris Turner, head of FX strategy at ING in London.
Reporting by Marc Jones; Editing by Kirsten Donovan