* U.S. and European energy shares fall on oil price decline
* Oil prices hit more than 2-week lows, U.S. stockpiles data weigh
* Investors remain focused on Friday U.S. jobs data
* Spot gold hits two-month low (Updates to open of U.S. trading; changes byline, dateline, pvs LONDON)
By Sam Forgione
NEW YORK, Aug 31 (Reuters) - U.S. and European shares fell on Wednesday after a drop in oil prices weighed on energy stocks, while two-year U.S. Treasury yields were on track for their biggest monthly increase since December on growing expectations for a Federal Reserve rate hike.
Oil prices tumbled to more than two-week lows, with U.S. crude falling more than 3 percent, after government data showed a large surprise weekly build in U.S. crude and distillate stockpiles and a smaller-than-expected draw in gasoline.
The losses in oil prices fueled losses in the S&P energy index, which was last down 1.7 percent, and the European STOXX 600 Oil and Gas sector, which was off 1.4 percent.
Investors remained focused, however, on the upcoming U.S. non-farm payrolls data on Friday, which could provide clues on the timing of the next interest rate hike from the Federal Reserve.
Boston Fed president Eric Rosengren said Wednesday the Fed was nearing its employment and inflation rate goals, adding that rate hikes could shield the economy.
Data showing the U.S. private sector added 177,000 jobs in August, compared with expectations of 175,000, boosted investors' optimism about Friday's jobs report. Analysts have noted low trading volumes in recent days, partly on anticipation of the jobs data.
"Today will be very quiet," said John Brady, senior vice president at R.J. O'Brien & Associates in Chicago. "It's late August and most risk managers aren't going to allow traders to comes in with large positions."
U.S. two-year Treasury yields, which are more susceptible to expectations about the timing of the Fed rate increases, were set to post an increase of more than 12 basis points for August.
That monthly rise was set to be the biggest increase since last December, when the Fed hiked rates for the first time in nearly a decade. A chorus of Fed officials saying that rate hikes look appropriate before year-end has increased expectations for short-term rates to rise.
MSCI's all-country world equity index was last down 1.45 points, or 0.35 percent, at 416.32.
The Dow Jones industrial average was last down 59.76 points, or 0.32 percent, at 18,394.54. The S&P 500 was down 8.29 points, or 0.38 percent, at 2,167.83. The Nasdaq Composite was down 18.31 points, or 0.35 percent, at 5,204.68.
Europe's broad FTSEurofirst 300 index was last down 0.25 percent at 1,353.75.
Brent crude was last down $1.20, or 2.48 percent, at $47.17 a barrel. U.S. crude was last down $1.40, or 3.02 percent, at $44.95 per barrel.
The U.S. dollar index, which measures the greenback against a basket of six major rivals, hit a three-week high of 96.255 after the slightly stronger-than-expected U.S. ADP data, but pared gains on weak manufacturing data.
"For the time being, the narrative is pretty dollar bullish," said Richard Franulovich, a senior currency strategist at Westpac Banking Corporation in New York.
Spot gold slid to a two-month low of $1,304.91 after the U.S. jobs data.
Additional reporting by Jamie McGeever in London, Dion Rabouin and Karen Brettell in New York, and Yashaswini Swamynathan in Bengaluru; Editing by Nick Zieminski