* Worlds stocks sag after heavy sell-off on Thursday
* Wall St lower as bond yields gain on jobs data
* Treasury yield curve steepens after miss on headline jobs number
* Oil prices stay near 4-year high
* Graphic: World FX rates in 2018 http://tmsnrt.rs/2egbfVh
By Laila Kearney
NEW YORK, Oct 5 (Reuters) - Stock markets sagged around the world on Friday after the release of U.S. jobs numbers signaled a continued tightening of the labor market and increased inflation pressures, while longer-dated Treasury yields rose.
The increase in non-farm payrolls slowed in September, likely from Hurricane Florence's impact on restaurant and retail payrolls, but the U.S. Labor Department report also showed a rise in wages that could keep the Federal Reserve on track for more interest rate hikes. Dow Jones Industrial Average .DJI fell 131.7 points, or 0.49 percent, to 26,495.78, the S&P 500 .SPX lost 5.49 points, or 0.19 percent, to 2,896.12 and the Nasdaq Composite .IXIC dropped 43.12 points, or 0.55 percent, to 7,836.40. pan-European FTSEurofirst 300 index .FTEU3 lost 0.73 percent and MSCI's gauge of stocks across the globe .MIWD00000PUS shed 1.00 percent.
A steep sell-off in Treasury bonds that started midweek and pushed 10-year yields to seven-year highs has weighed on stocks and rippled through bond markets globally.
"This week has been a bit of a bloodbath on the fixed income side of things," said Dean Popplewell, chief currency strategist at Oanda in Toronto. "I think the market moves in the bonds this week sideswiped a lot of individuals."
The yield on the 30-year Treasury bond US30YT=RR reached a four-year high of 3.396 percent, up 4.5 basis points from late Thursday. The benchmark 10-year yield US10YT=RR rose to 3.233 percent, up 3.8 basis points from late Thursday, but it had retraced some of those gains by 11 a.m. ET
The U.S. bond market will be closed on Monday for the Columbus Day holiday, though stock markets will open.
In the currency market, the U.S. dollar weakened in choppy trading. The dollar index .DXY fell 0.04 percent The euro EUR= was down 0.03 percent to $1.151. Japanese yen strengthened 0.16 percent versus the greenback at 113.73 per dollar, while Sterling GBP= was last trading at $1.3087, up 0.53 percent on the day.
Fears about Italy's finances pushed Milan stocks down more than 1 percent .FTMIB , while London's FTSE .FTSE , Frankfurt's DAX .GDAXI and the CAC in Paris .FCHI were off 1.1 to 0.95 percent. .EU
West Texas Intermediate (WTI) crude CLc1 futures rose 44 cents to $74.77 a barrel by 10:46 a.m. EDT (1446 GMT). It was on track for a weekly gain of about 2 percent.
Brent crude LCOc1 futures lost 9 cents to $84.49 a barrel. The contract was on course for a rise of around 2 percent for the week.
"Iranian exports could fall below 1 million barrels per day in November," U.S. bank Jefferies said, referring to looming U.S. sanctions on Tehran.
The bank said there was enough oil to meet demand, but "global spare capacity is dwindling to the lowest level that we can document... meaning any further supply disruptions would be difficult for the market to manage - and could lead to spiking crude oil prices."
The combination of rising oil prices, borrowing costs and a climbing dollar have also been rocking emerging markets, which tend to be vulnerable to all three.
Emerging market stocks lost 2.38 percent. lost 0.80
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