* Asia shares ex-Japan down 5 pct in past two weeks
* Dollar steady, but vulnerable to payrolls data
* Oil bounces as Canada wildfires threaten production
* Turkish markets hit by political uncertainty
By Marc Jones
LONDON, May 5 (Reuters) - European stocks and oil prices
snapped a four-day losing streak on Thursday and a rally in bond
markets fizzled out as investors began to position themselves
for U.S. jobs data.
The pan-European FTSEurofirst 300 index .FTEU3 , which had
fallen 1.2 percent to its lowest level in nearly a month in the
previous session, rebounded 0.3 percent as firmer oil prices
helped lift the region's big producers.
Asian shares failed to avoid a seventh day of falls but
there was a feeling of relief that at least the yen JPY=
looked to have settled following a searing run this month that
has sent it to an 18-month high. FRX/
Prime Minister Shinzo Abe said on Wednesday that Japan would
act if necessary to weaken the yen, while the dollar has been
supported by data which has fanned optimism that the U.S.
economy could bounce back after nearly stalling this year.
The dollar was holding at 107.10 yen JPY= in European
trading, above the recent 18-month trough of 105.55 but a long
way from last week's peak of 111.88.
The euro changed hands at $1.1454 EUR= , having been as
high as $1.1614 this week from a low of $1.1213 in April.
Against a basket of currencies the dollar was up 0.3 percent at
93.456 .DXY .
In commodity markets, industrial metals including copper and
iron ore nursed more losses. Oil bounced as a huge wildfire in
Canada disrupted oil sands production and escalating fighting in
Libya threatened the North African nation's output. O/R
Brent crude LCOc1 was quoted 71 cents higher at $45.33 a
barrel, while U.S. crude CLc1 added 89 cents to $44.67.
Bond markets had noticeably cooler feel, having seen one of
their sharpest rallies of the year so far over the last week.
Yields on 10-year German Bunds and U.S. Treasury notes edged
up to 1.179 and 0.208 percent receptively having both just hit
their lowest in two weeks US10YT=RR DE10YT=RR . EUR/GVD
The gap between Italian and German government borrowing
costs hit its widest level in nine weeks however, after Rome
announced an unscheduled bond exchange and investors readied for
a series of political events in Europe.
Stalled talks between Greece and its international creditors
over financial aid, as well as Spanish elections and Britain's
referendum on EU membership next month have led investors to
reduce their exposure to riskier assets.
"There is a bit of (debt) supply to be absorbed this week
and market sentiment is poor...so we are cautious on the
direction for the periphery and expect more volatility," Mizuho
strategist Antoine Bouvet said.
TALKING TURKEY
Turkish stocks fell and bond yields surged after officials
said overnight the ruling party was set to replace Prime
Minister Ahmet Davutoglu at an extraordinary congress in coming
weeks.
The decision, confirmed to Reuters by five AK Party
officials, came after a meeting of more than 1-1/2 hours between
Davutoglu and President Tayyip Erdogan that followed weeks of
public tension between the two men.
The lira bounced over 1.4 percent to 1.915 per dollar TRY=
in volatile early deals in Istanbul but that was preceded by a
three-day pounding that was one of its worst in decades.
"The political environment is very unpredictable, and this
will certainly have negative repercussions for Turkey's risk
premium, financial volatility and macroeconomic outlook,"
Finansbank said in a note.
The seventh straight dip for Asian shares overnight followed
mixed economic data that did nothing to assuage concerns about
global growth.
The latest survey from China showed the service sector
expanded at a slower pace in April, though firms did resume
adding staff.
The Caixin/Markit services purchasing managers' index (PMI)
dropped to 51.8, from 52.2 in March, but at least stayed in
growth territory. Hong Kong's version of the PMI slid into a
deeper contraction to touch an eight-month low.
The patchy outcomes left Shanghai stocks .SSEC flat while
trade across the region was stifled by a holiday in Japan.
MSCI's broadest index of Asia-Pacific shares outside Japan
.MIAPJ0000PUS eased 0.3 percent, and has now shed 5 percent in
just two weeks.
Wall Street also slipped amid mixed data.
The vast U.S. services sector expanded in April as new
orders and employment accelerated, offering hope economic growth
would rebound after a sluggish first quarter.
But other figures showed private employers hired the fewest
workers in three years, sparking concerns the all-important
payrolls report might also disappoint.
Friday's jobs figures are forecast to show a solid gain of
202,000 in April with unemployment steady at 5 percent.
"I think what has taken place more than anything else over
the past 48 hours is the questioning of the reflation trade that
was starting to be latched on by many, especially when you
consider the recent price action in the USD, commodities and
equities," CitiFX analysts said in a note.