NEW YORK/LONDON, Oct 3 (Reuters) - Global stocks fell on

Thursday, weighed down by tepid trading in equity markets across

the U.S. and other major regions, even as oil prices extended

gains amid rising geopolitical tension from the Middle East

conflict.

Wall Street's main indexes pared early gains and were

trading slightly down. Data released on Thursday showed rising

U.S. jobless claims, indicating labor market softness, but

strong service sector activity.

The Dow Jones Industrial Average fell 0.50% to

41,987.51, the S&P 500 fell 0.30% to 5,692.36 and the

Nasdaq Composite fell 0.21% to 17,887.08.

European stocks were last down 0.92%, as investors

digested weak business activity survey data from the bloc.

MSCI's gauge of stocks across the globe fell

0.44% to 841.78.

Asia-Pacific shares outside Japan had

earlier shed 1% overnight, largely driven by Hong Kong stocks

sagging after a sizzling rally, with several markets,

including mainland China and South Korea, closed for the day.

Japan's Nikkei bucked the trend, up 2% after the

country's newly elected prime minister Shigeru Ishiba said it

was not the time to raise rates after meeting central bank

governor Kazuo Ueda. Bank of Japan board member Asahi Noguchi

later said rates would increase cautiously and slowly.

Geopolitical tensions loomed large, after Israel bombed Beirut

early on Thursday, following a year of clashes with Iran-backed

Hezbollah.

Oil prices gained on Thursday as concerns grew that the

conflict could disrupt crude oil flows from the key exporting

region, overshadowing a stronger global supply outlook.

Brent and U.S. crude futures gained nearly 4% each to $76.76 and

$73.08, respectively.

"Oil's had a good week. But in context, you're looking at

kind of low 70s versus summer levels in the 80s. So I don't

think there's a signal from the market to say, brace yourself

for major escalation... But it's a volatile situation," said

Eren Osman, managing director of wealth management at Arbuthnot

Latham.

Gold prices fell as the U.S. dollar strengthened against

major curries. Spot gold dipped 0.34% on the day to $2,648.72,

but remained near a record high.

In currencies, the US dollar index gained 0.3% to 101.95.

. The euro was slightly down at $1.102575, and

not far from Wednesday's low of $1.10325, a level last seen on

Sept. 12.

Sterling fell 1.1% to $1.31095 after Bank of England

Governor Andrew Bailey told the Guardian newspaper that the

central bank could become a "bit more aggressive" on rate cuts

if inflation continued to ease. Against the Japanese yen

, the dollar strengthened 0.14% to 146.7.

Treasury yields rose after the

jobless claims data

and

service sector

report. Two-year Treasury yields were last at

3.6765% on Thursday, while benchmark 10-year yields

were at 3.821%.

Markets imply a nearly 34% chance the Fed will cut interest

rates by another 50 basis points in November, compared with

almost 60% last week, and have around 70 basis points of easing

priced in by year-end.

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