* World stocks edge higher after sharp gains on Tuesday
* Euro zone govt bond futures fall, yen under pressure
* Focus on this week's ECB rate decision, economic numbers
By Atul Prakash
LONDON, Dec 2 (Reuters) - World stocks advanced for a third straight session on Wednesday with anxiety over Dubai's debt problems taking a backseat and focus shifting to this week's economic numbers and the European Central Bank's rate meeting.
Euro zone government bond futures fell as traders braced for a U.S. private sector employment report later in the session for hints on the key payrolls numbers due on Friday. Investors were unwilling to take on big bets ahead of the European Central Bank policy meeting on Thursday.
Gold hit a record high above $1,215 an ounce and key base metals rose further, but oil came under pressure on data showing a surprise build in U.S. crude stocks. The yen broadly weakened as investors moved to stocks and some commodities.
Investor appetite for risky assets rose, with the VDAX-NEW volatility index down 2.2 percent. The lower the index, which is based on sell and buy options on Frankfurt's top-30 stocks, the higher the market's desire to take risk.
The broader all-country world index gained 0.1 percent at 1209 GMT, while FTSEurofirst 300 index of top European shares was up 0.2 percent after recording its biggest one-day gain in more than four months on Tuesday.
"After Tuesday's bounce back it's no real surprise investors are taking a breather today with little about to inspire fresh direction," said Mic Mills, senior trader at ETX Capital.
"All eyes are now focused on Friday's U.S jobs report as the Dubai drubbing fades into the memory," he added.
The international impact of Dubai's shock debt announcement last week lessened considerably amid expectations that the crisis will be largely contained to the emirate and a handful of large creditors and that problems will not infect debt markets much beyond the Gulf.
State-controlled Dubai World, which led the emirate's transformation into a regional hub for finance, investment and tourism, unveiled details late on Monday of the restructuring and which parts of its empire were affected. The process will focus on $26 billion of debt owed by its main property firms, Nakheel and Limitless.
Investors' attention has turned to the ECB's policy meeting on Thursday. It is widely expected to keep its refi rate on hold at one percent, but also to give guidance on the timing and extent of how it intends to withdraw generous liquidity stimulus from the system.
November's U.S. employment report by Automatic Data Processing at 1315 GMT is expected to show 155,000 jobs lost in the month after 203,000 lost in October.
YEN FALLS, BONDS WEAKER
The yen was broadly weaker as traders took Japan's new monetary policy measures, unveiled the previous day, and gains in stocks and some commodities, as signals to sell the ultra low-yielding currency.
"We had very strong yen appreciation (recently), and now there's some retracement. Risk appetite is a little bit stronger than it was last week when we had the Dubai news, so investors are taking profits," said Marcus Hettinger, FX strategist at Credit Suisse in Zurich.
The dollar held its ground against most major currencies, however, suggesting the resumption of "risk on" trades across asset markets, supported by receding fears over Dubai's debt problems, wasn't the principal driver of currencies.
The dollar has been widely considered the funding currency of choice in recent months, as investors have sold the low-yielding unit for other currencies and assets. Asian central banks were said to buying dollars on Tuesday.
"We have seen an upturn in risk appetite overnight. Equities are still on a firm footing but we are holding stations ahead of the ECB. That's going to be the key driver for the week," said Orlando Green, a rate strategist at Calyon in London.
European corporate credit default swaps were slightly tighter after a rise in stocks. The investment-grade Markit iTraxx Europe index was at 83.75 basis points, according to data from Markit, 0.75 basis point tighter versus late on Tuesday. (Additional reporting by Jon Hopkins, Emelia Sithole-Matarise and Jamie McGeever; editing by Stephen Nisbet and Toby Chopra) (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)
((atul.prakash@reuters.com; +44 20 7542 6189; Reuters Messaging: atul.prakash.reuters.com@reuters.net))