* Europe shares dip, eyes on Thursday's ECB meeting
* Asia shares hit two-month hit, Wall St seen lower
* Euro zone bond yields down in anticipation of ECB easing
* Oil up on brighter outlook but glut remains
By Nigel Stephenson
LONDON, March 7 (Reuters) - European shares fell on Monday,
unable to maintain the momentum that took Asian equities to
two-month highs, as investors said a rebound in stocks seemed
tired and looked ahead to a European Central Bank meeting
expected to deliver more stimulus.
U.S. shares were also expected to open lower, with futures
SPc1 1YMc1 suggesting they would open down 0.4-0.6 percent.
The euro tumbled against the dollar before Thursday's ECB
meeting at which policymakers are expected to cut interest rates
further into negative territory.
Sentiment in commodity markets was buoyant, however, with
oil powering ahead and iron ore surging on expectations Chinese
steel mills will implement short-term output cuts.
Chinese shares rose for a fifth consecutive day as
reassurances by the country's leaders that the economy would
remain on a sound footing soothed investors' concerns.
The pan-European FTSEurofirst 300 index .FTEU3 , which rose
0.7 percent on Friday after a forecast-beating U.S. jobs report,
fell 0.9 percent. It remains up around 7 percent this year.
Britain's FTSE 100 .FTSE fell 1 percent.
"Momentum is fading again and, combined with persistently
weak inflation readings, should ensure a comprehensive package
of stimulus measures," Peel Hunt strategist Ian Williams said,
referring to the ECB meeting, which is also expected to deliver
an extension of its asset-purchase programme.
In their first reaction to the U.S. data, Asian shares
gained. MSCI's broadest index of Asia-Pacific shares outside
Japan .MIAPJ0000PUS rose 0.3 percent to its highest since Jan.
4. It has recouped about 80 percent of its 2016 losses.
Japanese shares snapped a four-day winning streak as the yen
strengthened and investors took profits on last week' sharp
rally. The Nikkei 225 index .N225 closed down 0.6 percent.
Chinese shares rose after Prime Minister Li Keqiang spelled
out on Saturday a new five-year economic plan, which included an
average growth target of 6.5 to 7 percent and a moderate
increase in the fiscal deficit to 3 percent of GDP this year.
The CSI300 index .CSI300 of the biggest listed companies
in Shanghai and Shenzhen closed up 0.4 percent and the Shanghai
Composite .SSEC rose 0.9 percent.
Friday's payrolls data showed 242,000 jobs were created last
month and assuaged fears the U.S. economy could be headed into
recession. It also revived prospects of further Federal Reserve
interest rate hikes this year, something markets had priced out.
Prices still suggest no chance of a hike this month, but a
50 percent chance of a June hike, according to CME Fedwatch.
An unexpected fall in average earnings soothed concerns the
Fed would be in a hurry to raise interest rates, however.
The data and its implications for the economy helped lift
oil prices, which were also supported on Monday by a fall in the
number of active U.S. rigs to its lowest since 2009.
Brent LCOc1 , the global benchmark for crude prices, was up
54 cents at $39.26. It has risen more than a third from this
year's lows, though analysts caution that the glut that saw it
fall 70 percent from June 2014 levels remains.
Iron ore futures SZZFK6 surged almost 20 percent to around
$60 a tonne in anticipation of a short-term output cut in
China's top steel-producing region to improve air quality.
RAMP UP
The dollar rose 0.3 percent against a basket of currencies
.DXY , with the euro off 0.5 percent at $1.0946.
"There is still a higher likelihood that they over-deliver
and the euro goes down to around $1.08, maybe the high $1.07s,"
said Ulrich Leuchtmann, head of currencies research at
Commerzbank (DE:CBKG) in Frankfurt.
"Clearly there will be a much bigger move if they do not
deliver."
The yen, often sought when risky assets are out of favour,
bucked the trend and rose 0.2 percent to 113.58 per dollar.
German 10-year Bund yields DE10YT=TWEB fell 2.5 basis
points to 0.21 percent. U.S. 10-year yields US10YT=RR , which
rose after Friday's jobs data, were up 1.7 bps at 1.90 percent.
Gold XAU= held around $1,270 an ounce, just below last
week's 13-week high, on weak shares and the U.S. rate outlook.