(Updates for US jobs data)
* Dollar poised for first weekly drop in four
* Stocks ease on caution ahead of NFP, Italy referendum
* European stocks continue to lag, down 12 percent YTD
* Some bearish bets on Italy squared-off
By Vikram Subhedar
LONDON, Dec 2 (Reuters) - Global stocks, oil and the dollar eased on Friday as investors took a cautious stance before Italy's referendum on constitutional reform on Sunday, while a strong jobs report from the U.S. cemented the case for a Federal Reserve rate increase.
The upbeat employment report follows a strong set of economic data from the United States, including manufacturing activity and construction spending, and strengthens the view that the Fed will tighten monetary policy faster than expected to keep inflationary pressures in check.
U.S. unemployment dropped to 4.6 percent, its lowest in more than nine years, making it almost certain that the Federal Reserve will raise rates later this month futures on Wall Street ESc1 SPc1 were down 0.2 percent. The S&P 500 .SPX is up more than 2 percent since the November presidential election on hopes that President-elect Donald Trump's policies will stoke growth.
Yields for 10-year U.S. Treasuries US10YT=RR eased after reaching an 18-month high of 2.492 percent overnight.
The dollar was on course for its first weekly decline in four weeks against the euro and a basket of currencies .DXY as investors trimmed bets following recent gains.
"The dollar is off a little bit - maybe there was some disappointment, a stub of the toe, so to speak. But this isn't going to stop the Fed, we think, from raising three times between now and the end of 2017, including December.
In Europe, the benchmark STOXX 600 .STOXX fell more than 1 percent, dragged lower by industrial and financial stocks.
European stocks, down 12 percent this year, are the worst performers among major equity indexes globally. They have underperformed their U.S. peers by nearly 15 percentage points this year.
Some investors expect the trend to continue. Europe faces a string of elections over the next 12 months, starting Sunday, when Italians votes on Prime Minister Matteo Renzi's constitutional reform and Austrians elect their president.
ITALIAN REFERENDUM
Uncertainty over the outcome and market impact of the Italian referendum has caused choppy trading across European markets, with the country's beleaguered banking sector and government bonds seeing the busiest activity.
Italy's local benchmark stock index .FTMIB has lost about a quarter of its value this year and is by far the worst performing major market globally.
European equity funds suffered $2 billion in outflows in the week to Thursday, according to fund tracking firm EPFR, with year-to-date outflows now approaching nearly $100 billion.
Investors appear to be having some last-minute reservations and squared off some bearish bets before the referendum.
The gap between Italian IT10YT=TWEB and German bond yields - which shot to a 2 1/2-year high of 188 basis points (bps) last week - fell to 167 bps on Friday.
"I suspect on Monday it will be very difficult to have a definitive opinion on what could be the future government in Italy and the appetite for further reform," said Franck Dixmier, global head of fixed income at AllianzGI, adding that the fund was "short" Italian bonds.
In commodity markets, oil prices eased from the 16-month high they reached after the Organization of Petroleum Exporting Countries agreed to cut output for the first time since 2008. Russia also agreed to reduce production for the first time in 15 years.
Brent crude futures LCOc1 eased 0.26 percent to $53.80 a barrel.