*

Greenback, 10-year Treasury yields retreat from 3-month

peaks

*

Surprise drop in US jobless claims continues run of robust

data

*

Hawkish Fed bets to be tested by monthly payrolls data on

Nov. 1

*

Mega-cap earnings due next week from Alphabet, Amazon ( AMZN ),

Meta

(Updates prices)

By Naomi Rovnick and Kevin Buckland

LONDON/TOKYO, Oct 25 (Reuters) -

Global stocks were set to end the week lower as looming U.S

data and Japan's weekend election curbed a rally already knocked

off course by the close-run race for the White House and

expectations the Federal Reserve will resist rapid rate cuts.

MSCI's broad world equity index was steady

on the day but heading for a 1.2% slide on the week, its first

weekly loss of the month, while European shares also

started the day 0.2% lower.

U.S. Treasuries

drew buyers

on Friday but were still heading for a sixth straight

losing week, futures markets tipped Wall Street's S&P 500

for lacklustre trading later in the day and the dollar

drooped.

A parade of pivotal events for markets is about to

start, with Japan's

parliamentary election

on Sunday and the keenly-watched monthly U.S. payrolls

report on Friday.

Earnings are also due from tech mega-caps Alphabet,

Amazon ( AMZN ), Apple ( AAPL ), Meta, and Microsoft ( MSFT ). The U.S. presidential

election follows on Nov. 5, with a Fed rate decision two days

later.

Markets have

tilted towards Donald Trump returning to the White House,

driving Wall Street stocks to record highs earlier this month on

bets that business tax cuts would shield the economy from

additional inflation triggered by his proposed import tariff

hikes.

But with the Republican candidate Trump and Democrat

Vice President Kamala Harris neck and neck in crucial swing

states, investors are anxious about a contested result roiling

world markets and unleashing fresh geopolitical uncertainty.

"I think we might have two or three months of maximum

uncertainty and social risk. And the markets would not like that

at all," Carmignac chief economist for cross-asset Raphael

Gallardo said.

Britain's 10-year gilt yield, at 4.212%, is

up 18 basis points this week amid fears of disorderly moves

around the Oct. 30 Budget, where finance minister Rachel Reeves

has hinted she may loosen debt rules to increase borrowing.

VOLATILITY

Indices that track predictions of market volatility have

risen this week, with the VIX gauge of expected swings on

the S&P 500 climbing to a reading of 19, up from about 15 a

month ago.

The MOVE index of bond market volatility is close to

its highest point in a year and euro volatility hit an

18-month high on Thursday.

Gold eased 0.3% on Friday to $2,727 per ounce

after hitting a record on Wednesday as haven buying ramped up.

The euro was flat at $1.0823, down sharply from

about $1.12 a month ago. Sterling, at $1.297, has

swooned almost 3% lower this month.

Ahead of the Nov. 1 monthly payrolls report that

Fed-watchers scrutinise for monthly policy clues, data overnight

showed an unexpected drop in weekly applications for U.S.

unemployment aid.

The Fed cut borrowing costs by 50 bps in September in

its first such move since 2020, but money markets have dropped

earlier bets for another jumbo move next month, with most

traders anticipating a quarter point reduction instead.

The yield on the 10-year U.S. Treasury,

which moves inversely to the price of the debt instrument and

sets the tone for debt costs worldwide, stood at 4.1801% on

Friday after it touched a three-month top of 4.26% on Wednesday.

The dollar index, which measures the currency

against major peers, was little changed at 104.03 after hitting

a three-month peak on Wednesday.

EYES ON JAPAN

Polls suggest Japan's ruling Liberal Democratic Party,

which wants the BoJ to raise ultra-low interest rates, may lose

its majority and need to enter coalition with opposition parties

who back continued monetary stimulus.

Japan's Nikkei dropped 0.7% on Friday and the yen

was steady at 151.87 per dollar after Japanese

officials warned speculators off betting against the currency,

which has weakened rapidly from around 141 in mid-September.

Elsewhere in Asia Hong Kong's Hang Seng rose 0.5% and

mainland Chinese shares added 0.7%.

Brent crude futures added 0.3% to $74.66 a

barrel.