* European stock markets flat or lower in early trade
* MSCI Asia-Pacific index up 0.4%, Nikkei gains 0.4%
* U.S. jobs report in focus as risk sentiment improves
* Safe-haven government bonds, yen on the defensive
* Emerging-market stocks and FX index have best week since June
* Second week of falls for gold
By Marc Jones
LONDON, Sept 6 (Reuters) - Stimulus from China capped a strong week for global share markets on Friday, while bond buyers and dollar dealers were waiting for U.S. jobs data after their first significant selloffs in months.
After a roller-coaster week dominated by UK and Italian political drama, Washington and Beijing trade talk, global monetary stimulus and Argentina's imposing capital controls, calm looked to have returned. Then Beijing cut in.
As Chinese markets were closing, the country's central bank said it was slashing the amount of cash that banks must hold as reserves for the third time this year. That released a total of 900 billion yuan ($126.35 billion) to shore up the slowing economy.
Europe's pan-region Stoxx 600, London FTSE, Paris CAC 40 and DAX in Frankfurt were all higher, after rising to their highest in more than month on Thursday.
Euro zone bond yields steadied after their worst one-day selloff in more than a year. The euro and pound saw weekly gains after the biggest drop for the dollar in a month.
"It feels to me like the air is coming out of it a bit," Societe Generale strategist Kit Juckes said, referring to the recent surge in volatility. "So we will see what we get from the payrolls."
The closely watched U.S. non-farm payrolls report due at 1230 GMT was expected to show 158,000 jobs were added in August and the unemployment rate was unchanged at 3.7%.
Surveys on Thursday had suggested the U.S. may be in better shape than investors have been fearing. Services activity accelerated in August and private employers increased hiring more than expected.
Despite the reassuring signs, bond markets still expect the Federal Reserve to cut U.S interest rates this month and a total of 55 basis points of cuts by the end of the year.
Overnight, MSCI's broadest index of Asia-Pacific shares outside Japan added 0.6%, giving it a 2.4% weekly gain, its best week since mid-June.
United States and China agreed to hold high-level talks early in October, raising hopes for their long trade conflict would be resolved.
The Shanghai Composite Index ended up 0.5% and Hong Kong's Hang Seng rose 0.6%, even though the rating agency Fitch downgraded the city's credit rating after months of unrest.
Australian stocks gained 0.5%, South Korea's KOSPI climbed 0.2% and Japan's Nikkei advanced 0.5%. On Thursday, Wall Street's Dow added 1.4%, the S&P 500 climbed 1.3% and Nasdaq rose 1.75%.
"The strong U.S. data are the main part of the latest turn in markets as they are key factors impacting equities and U.S. yields, therefore determining how long this 'risk on' phase will last," said Junichi Ishikawa, senior FX strategist at IG Securities in Tokyo.
The August payrolls report "will get more attention than usual as it could further fuel the risk-on phase, which in turn would boost the dollar," Ishikawa said.
Despite its broader decline, the dollar stood at 107.04 yen after climbing to a one-month high of 107.235 overnight.
The pound rose to $1.23 from the near-six-week peak of $1.2353 it reached after Britain's parliament moved to block a UK departure from the European Union without a transitional agreement. It had fallen to a three-year low of $1.1959 midweek amid threats of a no-deal Brexit.
The euro was steady at $1.1039 after rising 0.5% overnight, when it was helped by the Brexit drama and the sagging dollar.
U.S. Treasuries fell in price and their yields rebounded from multi-year lows as investors moved out of safe assets into equities.
The 10-year Treasury yield was 1.536%, up from a three-year low of 1.428% in midweek, when soft economic data and Sino-U.S. trade worries stoked global recession concerns.
"The recent panic in markets was excessive. And if a sustained reversal of fragile sentiment gets under way, U.S. equities will test fresh record highs and a corresponding drop in bond prices will present an good bargain-hunting opportunity," said Eiichiro Tani, chief strategist at Daiwa Securities.
In commodities markets, Brent oil futures were little changed at $60.97 per barrel. Brent had climbed to a one-month peak of $62.40 per barrel on Thursday after data showed U.S. crude stockpiles decline and the news about U.S.-China trade talks. (Additional reporting by Shinichi Saoshiro in Tokyo; editing by Larry King)