GLOBAL MARKETS-US stocks down before jobs report, sterling falls

* U.S. shares dip on cloudy tech outlook, jobs trepidation

* Sterling, euro fall against dollar

* Bank of England, ECB keep rates unchanged

* BoE unexpectedly extends bond purchases

By Daniel Bases

NEW YORK, Aug 6 (Reuters) - Caution crept back into U.S. stock markets on Thursday a day ahead of the July unemployment report and as a cautious outlook from technology bellwether Cisco Systems cast a chill, but European shares rose on soothing earnings results.

A surprise move by the Bank of England to expand its bond buying program by 50 billion pounds, a measure known as quantitative easing, also supported European stocks, driving up financial shares.

The BoE's move, however, along with its decision to hold interest rates at a record low 0.50 percent pushed down sterling against the dollar by more than 1 percent.

The dollar also rose off multi-month lows against the euro after the European Central Bank left its record-low benchmark interest rate unchanged at 1.0 percent.

The stronger dollar contributed to losses in U.S. crude oil after it topped $72 a barrel, a one-month high.

A better-than-expected weekly U.S. jobless claims report pushed up stocks in early trade, but concerns about the July jobs report ate away at investor resolve.

"Obviously, everyone looks at the employment number as potentially market moving, so there could be a little trepidation ahead of that report," said Todd Salamone, vice president of research at Schaeffer's Investment Research in Cincinnati, Ohio.

Comments by the chairman of Cisco Systems Inc , the world's largest network equipment manufacturer that is considered a technology bellwether, that it is too soon to call a recovery also hurt sentiment. A semiconductor index <.SOXX> closed down 1.32 percent, but Cisco shares bounced back from early losses to close up 0.6 percent to $22.29. [nN03535216]

The Dow Jones industrial average <.DJI> fell 24.71 points, or 0.27 percent, to 9,256.26. The Standard & Poor's 500 Index <.SPX> lost 5.64 points, 0.56 percent, to 997.08. The Nasdaq Composite Index <.IXIC> dropped 19.89 points, or 1 percent, to 1,973.16.

The Labor Department reported initial U.S. weekly jobless claims fell by 38,000 to a seasonally adjusted 550,000 in the week ended Aug 1. [ID:nN06313199]

July non-farm payrolls data is due Friday. A Reuters survey forecasts the number of newly jobless in July at 320,000, which would be the least for any month since September.

MARKETS DIVERGE

In Europe, financial stocks led European share indexes higher.

The FTSEurofirst 300 <.FTEU3> index of top European shares closed up 0.43 percent at 934.47 points. The index is up 14 out of the last 19 sessions and stands 45 percent above its record low in March. However it is still down 43 percent from a 2007 multi-year peak.

"Over the last month, people have become more convinced that some sort of a recovery is on its way and a second wind has come into the market," said Andrew Bell, head of research at Rensburg Sheppards.

"I don't think that it's about to win a gold medal for a sprint, but at least the economy is off the injury list and shows signs of convalescing," he added.

But some questioned the markets' ability to sustain a rally that is being helped by the central bank's quantitative easing.

"In the short-term, QE will be good for markets. But the longer-term question of what happens when stimulus stops or (is) even withdrawn, it may not be quite positive and that's a question for another day," said Peter Dixon, UK economist at Commerzbank.

The MSCI all-country world index <.MIWD00000PUS> fell from earlier highs to a loss of 0.2 percent. However the index is up over 56 percent from its March lows.

Tokyo shares closed at a 10-month high, with automakers such as Honda Motor Co. <7267.T> leading way on hopes the U.S. government will extend its popular "cash-for-clunkers" car-buying program with another $2 billion.

In credit markets, Treasury prices finished slightly lower as optimism from the better-than-expected weekly jobs data offset the safe-haven flows caused by weaker stocks.

The benchmark 10-year U.S. Treasury note slipped 4/32 of a point in price, pushing the yield up to 3.764 percent. Bond prices move inversely with yields.

Euro zone government bond prices dropped and the Schatz yield hit a six-week high, after getting caught in a tug-of-war between the BOE-inspired rally and disappointment from the European Central Bank president, Jean-Claude Trichet.

Comments by Trichet that he saw the recession bottoming out and inflation turning positive before year end were taken negatively by bond investors. ((ECB Trichet highlights, see [nECBNEWS]))

The 10-year Bund yield rose 2.5 basis points to 3.372 percent. The two-year Schatz yield was flat at 1.47 percent, after scaling its highest level since late June of 1.517 percent.

The euro was down 0.37 percent at $1.4355 while the the dollar rose 0.50 percent against the yen at 95.38 . Sterling traded down 1.18 percent to $1.6781 .

U.S. light sweet crude oil settled down 3 cents, or 0.04 percent, to $71.94 per barrel, and spot gold prices gained $1.10, or 0.11 percent, to $963.05. (Additional reporting by Rachel Chang, Jeremy Gaunt, George Matlock, Dominic Lau, Brian Gorman, Tamawa Desai and Angela Moon; Editing by Leslie Adler) (To read Reuters Global Investing Blog click on http://blogs.reuters.com/globalinvesting; for the MacroScope Blog click on http://blogs.reuters.com/macroscope; for Hedge Hub click on http://blogs.reuters.com/hedgehub)