* A strong jobs report may spark more selling
* MSCI APXJ set for best weekly performance since March
* Japan down 1.2%, Australia falls 1.5%
* Economic problems, lukewarm bond auctions weigh on euro
By Saikat Chatterjee
HONG KONG, Sept 2 (Reuters) - European shares were set to snap a four-day rising streak by opening lower on Friday, following Asian peers, while the Swiss franc rose as market players booked profits ahead of a key U.S. jobs report and on broader economic worries.
Stock future indices in Europe STXEc1 declined between 1.5 to 2 percent while U.S. stock futures SPc1 eased 0.4 percent, with a New York Times report that the agency which oversees U.S. mortgage markets is preparing to file suit against "more than a dozen" big U.S. banks also hurting sentiment.
Trading was light in Asia with investors largely sidelined before the U.S. nonfarm payroll report, the only jobs data due before the Federal Reserve holds a two-day meeting at which some market participants expect some sort of policy easing.
While a strong bout of short covering this week has lifted most equity indices from August lows, the rally has taken place amid very low volume, indicating that sentiment remains fragile and markets are still vulnerable to selling pressure.
On Friday, stocks dipped in Asia as investors cut exposure to risky assets, but the region's shares still managed to score a solid weekly gain of about 4 percent, the best weekly performance since March.
The influential U.S. non-farm payrolls data is expected to show an increase of 75,000 jobs, although market whispers are for a much lower number. The data is due at 1230 GMT.
A decline in the employment component of the Institute for Supply Management's (ISM) factory activity index on Thursday heightened worries that August U.S. jobs growth will be weaker than feared. ISM's factory activity index came in only just above the level that indicates growth.
Ironically though, a better-than-expected non-farm payrolls number could lead to a "risk-off" market reaction because that will be interpreted as making it less likely the Fed will launch a fresh round of easing at this month's policy meeting, BNP Paribas strategists said in a daily note.
Expectations of more stimulus have risen after Chairman Ben Bernanke said the Fed will meet for two days this month even though he steered clear of mentioning any fresh round of stimulus for the ailing economy at a speech last month.
Japan's Nikkei ended 1.2 percent down after rising for six days while Australia fell by 1.5 percent.
"Global economic worries are the main focus and volume has been relatively low recently. At times like this, both buying and selling can be risky, so this is keeping stocks trapped in their recent ranges," said Yutaka Miura, senior technical analyst at Mizuho Securities.
The MSCI Asia Pacific ex-Japan index weakened 0.9 percent after rising by more than five percent this week. For the year, it is still down nearly 9 percent mainly due to a sharp drop in August.
EURO WEAKENS
In currency markets, the Swiss franc remained the currency of choice as slowing factory output from the United States to China prompted market players to cut exposure to risky assets.
The U.S. dollar slipped to 0.7922 francs , well off highs around 0.8239 at the start of the week.
The euro languished near a three-week low of around $1.4224 hit on Thursday as lukewarm demand at a Spanish bond sale and weak euro zone PMI data reminded investors that the region's troubles are far from over.
Traders expect the common currency to trend lower in coming days on growing worries about the euro zone growth outlook and the possibility of the European Central Bank softening its hawkish stance at next week's policy meeting.
Gold was steady around the 1,825 per ounce line with investors reluctant to take positions before the data.
Oil CLc1 edged lower to below $89 a barrel on broader economic concerns though worries of supply cuts due to impending storms supported prices. (Additional reporting by Lisa Twaronite in TOKYO; Editing by Richard Borsuk; To read Reuters Global Investing Blog click on; here; for the MacroScope Blog click on; blogs.reuters.com/macroscope; for Hedge Fund Blog Hub; click on blogs.reuters.com/hedgehub; For the state of play of Asian stock markets please click on: <0#.INDEXA>)
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