Global stocks dip as investors cautious on recovery

By Natsuko Waki

LONDON (Reuters) - World stocks fell on Friday after a disappointing U.S. jobs report and a sluggish euro zone services sector survey reinforced expectations that the process of recovery in the global economy would be long and slow.

U.S. employers cut far more jobs than expected last month and the unemployment rate hit 9.5 percent, the highest in nearly 26 years.

While analysts caution that jobs data is a lagging indicator and unemployment can still rise when the economy is turning around, it was enough to prompt investors to reduce their risk assets especially before a long weekend in the United States.

Furthermore, signs of a recovery in the euro zone's dominant service sector took a backwards step in June with the final services purchasing manager index coming in at 44.7 in June, down from May's seven-month high of 44.8.

This marks the thirteenth consecutive month the index has been below the 50.0 mark that divides growth from contraction.

"Payrolls were a wake up call," said Jacques Henry, analyst at Louis Capital Markets, in Paris.

"The data showed that the economic recovery remains fragile and more downbeat data is to be expected, particularly on the jobs front. Stocks are ripe for a consolidation period." MSCI world equity index .MIWD00000PUS fell 0.2 percent on the day, having hit the 1-1/2 week low earlier.

The pullback comes after the MSCI world equity index rose more than 21 percent in the second quarter, its biggest ever quarterly gain in its 21-year history.