LONDON, SINGAPORE Dec 8 (Reuters) - World stocks teetered on their first weekly loss since October, government bond prices dropped and the dollar firmed as unexpectedly strong U.S. jobs data prompted traders to fold on bets for rapid interest rate cuts next year.

MSCI's broad gauge of world stocks traded flat on Friday, heading for a 0.1% fall this week after five weeks of gains.

U.S. employers added 200,000 new workers in November, Friday's non-farm payroll report showed, topping expectations for 180,000 new jobs and dashing hopes that the Federal Reserve will turn dovish at its rate setting meeting next week.

The 10-year Treasury yield, which rises as the price of the benchmark debt security falls and tracks expectations for long-term borrowing costs, was 13 basis points (bps) higher on the day, at 4.129%, after Friday's jobs data.

The Fed has raised its main funds rate by more than 5 percentage points since March 2022. With inflation still running above its 2% target and fuelled by a tight jobs market and rising wages, Fed chair Jerome Powell has said the central bank is ready to tighten monetary policy again if necessary.

"If the Fed is going to cut aggressively, it will be due to a recession and a notable drop in inflation led by unemployment. The numbers game of NFP (non-farm payrolls) suggests we are still far from those levels," said BNY Mellon's head of markets strategy and insights, Bob Savage.

Futures indicated the U.S. S&P 500 would flatline in early New York trading. Contracts tracking the tech-heavy Nasdaq 100, which is sensitive to fears of growth companies' borrowing costs staying high or rising, eased 0.4% lower..

COMPLACENCY

Global markets have been anticipating rate cuts by central banks as soon as March next year even though economic forecasters do not expect significant recessions in the United States or the euro zone.

The S&P 500 has risen more than 9% since early November. The 10-year Treasury yield which moves inversely to the price of the benchmark debt and tracks expectations for long-term borrowing costs, has dropped from more than 5% in late October.

"There's so much complacency in the market right now," said Olivier Marciot, cross-asset portfolio manager at fund manager Unigestion. "You can't have a consensus calling for a soft landing and, at the same time, investors pricing in major cuts."

The VIX, a measure of implied volatility on the S&P 500 that reflects investor anxiety about stock market corrections, is trading at 12.8, almost its lowest since before the COVID-19 shock of early 2020.

DOLLAR FIRM

The dollar index was last up 0.4% to 104.13, having risen after the non-farm payrolls report. The euro, which was on track for a weekly drop of more than 1% this week, traded at $1.077.

Japan's yen fell 0.6% to 144.96. This came after the yen rose more than 2% on Thursday, as BOJ Governor Kazuo Ueda forecast an "even more challenging" year ahead for managing inflation, which traders took to mean the BOJ could end negative interest rates early next year. The BOJ will next set monetary policy on Dec. 19.

Elsewhere Brent crude, which touched a six-month low on Thursday on worries of sluggish demand, added 2.3% to $75.74 a barrel on Friday.

Gold, having touched a record high early in the week before recoiling, fell 0.4% on Friday to $2,020 an ounce.

(Reporting by Tom Westbrook and Naomi Rovnick; Editing by Edmund Klamann, Emelia Sithole-Matarise and Christina Fincher)