GLOBAL MARKETS-European shares higher, U.S. jobs in focus

* European shares up 0.9 percent; Japan loses 3.6 percent

* South Korea joins rate cut parade

* U.S. jobs data in focus

* Dollar weaker against most currencies

By Jeremy Gaunt, European Investment Correspondent

LONDON, Nov 7 (Reuters) - European shares climbed on Friday while most Asian shares fell as investors sought to balance economic worries with a new era of lower interest rates ahead of key U.S. jobs data.

Oil dropped briefly below $60 a barrel before bouncing back to nearly $62 and the dollar was generally weaker.

The latest U.S. non-farm payrolls report is widely expected to show the world's largest economy continuing to bleed jobs. The median forecast of economists polled by Reuters last week is for payrolls losses of 200,000 in October.

Investors have found few consistent havens except for the yen and some government bonds, with the financial crisis expected to see the world's developed economies headed for the first full-year contraction since World War Two.

Central banks have been slashing interest rates to shore up deteriorating economies. The Bank of Korea cut for the third time in a month on Friday, following half-point cuts on Thursday from the European Central Bank and the Swiss National Bank.

The Bank of England also slashed its key rate by 1.5 percentage points on Thursday, much more than the market expected, taking borrowing costs to the lowest since the 1950s.

"The rate cuts send a signal on how committed the central banks are in reviving the global economy," said Jackson Wong, investment manager at Tanrich Securities in Hong Kong. "They inspire some confidence among investors."

Some of this fed into European stock markets.

The pan-European FTSEurofirst 300 was up nearly one percent.

"We expect the rescue packages of governments for the banking system, global rate cuts by central banks and the latest recovery of share prices to have at least trimmed fears," said Ralph Solveen, an economist at Commerzbank in Frankfurt.

Earlier, however, Japan's Nikkei average dropped 3.6 percent as growing global economic worries sent the yen higher and hit exporters.

The Nikkei .N255 ended down 316.14 points at 8,583.00. The broader Topix .TOPX lost 3.3 percent to 879.00.

DOLLAR FALLS

The dollar was weak against most currencies, particularly the euro , which gained 1 percent to $1.2828.

It also lost half a percent to 97.33 yen.

Trade-weighted sterling <=GBP> fell to a 12-year low.

"The general thinking is that things must have been pretty bad for the Bank of England to have cut by 150 basis points," a London-based trader said.

Shorter-dated euro zone government bond yields slipped ahead of the U.S. data and as investors mulled the possibility of further interest rate cuts from the European Central Bank.

Two-year paper yielded 2.411 percent , some three basis points less than in late Thursday trade while the 10-year Bund yield was steady at 3.711 percent . (Additional reporting by Sarah Marsh, editing by Mike Peacock)