(For a Reuters live blog on U.S., UK and European stock

markets, click or type LIVE/ in a news window.)

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Weekly jobless claims data due at 8:30 a.m. ET

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Levi Strauss tumbles after saying it is exploring unit

sale

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Futures off: Dow 0.34%, S&P 500 0.28%, Nasdaq 0.38%

(Updated at 07:20 a.m. ET/1120 GMT)

By Johann M Cherian and Purvi Agarwal

Oct 3 (Reuters) - U.S. stock index futures dipped on

Thursday as markets awaited labor data for clues on the economic

outlook and the likelihood of further interest-rate cuts from

the Federal Reserve, while watching for a potential escalation

in Middle East hostilities.

Wall Street's three main indexes closed flat on Wednesday

after a private survey signaled the labor market was not in a

sharp deterioration.

Caution prevailed nonetheless, as investors contemplated the

scale of Israel and the United States' response to Iran's recent

attack on Israel. The CBOE volatility index, Wall Street's fear

gauge, hovered at more than three-week highs at 19.73.

"Fears that Israel may retaliate against Iran soon did

not allow investors to cheer data pointing to decent performance

of the U.S. labor market (on Wednesday)," said Charalampos

Pissouros, senior investment analyst at XM.

"Should (Friday's) official jobs report confirm the

notion of a decently performing market, equities could rebound,

even if this means fewer Fed rate cuts down the road."

Weekly jobless claims data due later in the day is expected

to show that the number of Americans filing for unemployment

benefits stood at 220,000 for the week ending Sept. 28, up from

218,000 the week before that. The pivotal nonfarm payrolls

figures are due on Friday.

Also on tap is the Institute for Supply Management's survey

on service sector activity, which makes up the majority of the

U.S. economy. For the month of September, the index is expected

to stay in expansion territory at 51.7.

Dow E-minis were down 143 points, or 0.34%, U.S.

S&P 500 E-minis were down 16 points, or 0.28% and Nasdaq

100 E-minis were down 77 points, or 0.38%.

U.S. stocks have rallied for much of the year, with the

benchmark S&P 500 confirming a bull rally and logging

gains in eight of the previous nine months on expectations of

lower borrowing costs.

Tech stocks have led the charge on the prospect of

their earnings getting a boost from artificial intelligence

integration.

Investors will also assess comments from Fed policymakers

Raphael Bostic and Neel Kashkari later in the day. Richmond Fed

President Thomas Barkin said on Wednesday that inflation cooling

to the Fed's 2% target could take longer than expected, limiting

the magnitude of further rate cuts next year.

Odds that the U.S. central bank will trim rates by 25 basis

points at its November meeting stand at 64.8%, up from 50.7% a

week ago, according to the CME Group's FedWatch Tool.

Meanwhile, a workers' strike on the East and Gulf coasts

entered its third day. Morgan Stanley economists said a

prolonged stoppage could raise consumer prices, with food prices

likely to react first.

Among premarket movers, oil stocks such as Occidental

Petroleum ( OXY ) and Exxon Mobil ( XOM ) were little changed,

although crude prices rose more than 1%.

Levi Strauss tumbled 11.6% after the company said

it was considering a sale of its underperforming Dockers brand

and forecast fourth-quarter revenue below expectations.

Tesla dropped 1.3% a day after reporting a

smaller-than-expected rise in third-quarter deliveries.