World stocks slipped on Friday, handing back some of the gains made after Group of 20 leaders presented a united front to combat the financial crisis as investors grew cautious ahead of a key U.S. jobs report. At their London summit, G20 leaders pledged $1.1 trillion of additional funds to the International Monetary Fund and other institutions and to boost trade finance.

European shares failed to extend Asia's gains as investors turned reluctant to keep buying ahead of a closely-watched U.S. employment report, which is expected to show the world's biggest economy losing 650,000 non-farm jobs in March.

World stocks have risen more than 20 percent since hitting a 5-1/2 year low in March and investors are closely watching if the rally could be sustainable this time even with some consolidation as forward-looking economic indicators such as purchasing manufacturing surveys have shown improvement.

We increased our equities exposure on Monday before the G20, going slightly less underweight, as we believe we should have better newsflow regarding the U.S. economy in the next months, said Thierry Lacraz, strategist at Pictet.

The unemployment numbers will unfortunately be relatively bad and from the point of view of psychology not good at all for stock, but it is a lagging indicator.

MSCI world equity index <.MIWD00000PUS> was down 0.1 percent on the day. Risky assets also found support after the U.S. Financial Accounting Standards Board promised more flexibility in valuing toxic assets in a move that boost bank earnings and improve their capital levels.

For now, stocks are giving the FASB fix the thumbs up... The profits of U.S. banks and brokers for the first quarter will get an artificial boost. But not the profits of banks anywhere else in the world. This is certainly another victory for the obfuscators, Societe Generale said in a note to clients.

The FTSEurofirst 300 index <.FTEU3> fell 0.8 percent.

Emerging stocks <.MSCIEF> were up 0.2 percent.

U.S. crude oil fell 1.2 percent to $52.02 after surging 9 percent.

The June bund futures fell 22 ticks.

The dollar <.DXY> rose 0.2 percent against a basket of major currencies.

(Additional reporting by Sitaraman Shankar)

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