(Updates at 0755 GMT)

By Huw Jones

LONDON, April 5 (Reuters) - Global shares retreated on

Friday as geopolitical tension kept crude oil above $90 a barrel

ahead of U.S. payroll numbers, and hawkish central bankers

raised doubts about the pace and timing of interest rate cuts.

The threat of supply disruptions from prolonged conflict in

the Middle East kept Brent oil futures above $90 a

barrel, a level not seen since last October, with prices heading

for their second weekly gain.

The dollar firmed against peer currencies after

rebounding from a two-week low, while gold's rally to

record highs on Thursday came to a halt ahead of the U.S.

payroll numbers.

The MSCI All Country stock index was down

0.3% at 770.7 points as it continues to ease in the first week

of the quarter after hitting a lifetime high at 785.62 points on

March 21.

In Europe, the STOXX index of 600 companies dropped

1.2% to 504.7 points, after Tuesday's lifetime high of 515.77

points.

A cooling U.S. services sector and comments this week from

Fed Chair Jerome Powell reinforced the view that rate cuts were

likely to commence at some point this year.

However, some other Fed officials have taken a more

conservative view, with Minneapolis Fed President Neel Kashkari,

in particular, striking a more hawkish stance overnight, saying

rate cuts might not be required this year if inflation continues

to stall.

"It's the first time I've heard those kind of statements, so

the markets sold off, and at the same time we had a flare-up in

geopolitical tensions in the Middle East," said Mark Ellis, CEO

of Nutshell Asset Management.

So far, however, there appears to be a healthy pullback in

markets that had been grinding higher in a very tight trendline,

making it look a bit stretched as investors ready for important

U.S. payroll numbers, Ellis said.

He pointed to a jump in the VIX, Wall Street's 'fear

gauge', which posted its highest close since Nov. 1.

"It suggests we are at a bit of a turning point now, whether

this is a natural pullback in a bull market, or whether it's

going to turn into something a little bit more," Ellis said.

U.S. non-farm payroll numbers for March are due before the

opening bell on Wall Street, with economists expecting a rise of

200,000, compared with 275,000 in February, while the

unemployment rate is likely to keep steady at 3.9%.

"We think a print below 200,000 should put pressure on the

dollar, endorsing the recent signs that the employment story is

softening and that the Fed will be in a comfortable position to

start cutting in the summer," ING bank analysts said in a note.

U.S. stock index futures,, were

trading firmer, recovering some ground after the three key

indexes fell more than 1% each on Thursday on hawkish Fed

comments and Middle East tension.

MIDDLE EAST TENSION

Markets digested news that Israel braced on Thursday for a

possible retaliatory attack after its suspected killing of

Iranian generals in Damascus this week, and Prime Minister

Benjamin Netanyahu said the country would harm "whoever harms us

or plans to harm us".

In a later call with Netanyahu, U.S. President Joe Biden

threatened to condition support for Israel's offensive in Gaza

on it taking steps to protect aid workers and civilians.

MSCI's broadest index of Asia-Pacific shares outside Japan

fell 0.45%, tracking a late tumble on Wall

Street as risk aversion dominated the market mood. The index was

set to end the week little changed.

A holiday in China also made for thinner trade.

Tokyo's Nikkei fell 2%, pressured in part by a

stronger yen, thanks to the prospect of further rate hikes there

and more jawboning from Japanese officials.

Hong Kong's Hang Seng Index edged down 0.6%.

Fed officials' comments supported the dollar against a

basket of currencies, lifting it away from a two-week low

hit after a downbeat U.S. services survey.

The euro was steady, and the yen rose to

a two-week high.

Fed fund futures point to just under 75 basis points

worth of easing this year, closer in line with the Fed's

projections and a significant pullback from nearly 160 bps worth

of cuts priced in at the start of the year.

That shift has left U.S. Treasuries struggling, with the

10-year yield hovering near its highest in more than

three months, last at 4.321%.

The two-year yield firmed at 4.6520%. Bond yields

move inversely to prices.

In commodities, Brent edged up to $90.78 a barrel,

after striking a more than five-month high on Thursday.

U.S. crude eased a touch to $86.51 per barrel.

Gold retreated from a record high and was last slightly

lower at $2,288 an ounce.