World stocks slipped from the previous day's two-week high while the dollar rose broadly on Thursday as investors looked to a closely-watched U.S. employment report to gauge the state of economic recovery.

The world's biggest economy is expected to have lost 363,000 non-farm jobs in June, while the unemployment rate is expected to tick up to 9.6 percent.

After pushing world stocks up by more than 21 percent in the second quarter, investors need to see more evidence of a sustainable economic recovery before buying stocks further.

The non-farm payrolls are probably not necessarily going to be good news. It is a lagging indicator so it is likely to continue to get worse before it gets better, said Justin Urquhart Stewart, director at Seven Investment Management. MSCI world equity index fell 0.5 percent, having posted the biggest gains in its 21-year history in the three months to end-June.

The FTSEurofirst 300 index fell 1.4 percent while emerging stocks <.MSCIEF> lost 0.4 percent.

The euro dropped 0.4 percent to $1.4088 and the September Bund future rose 8 ticks ahead of a monetary policy decision by the European Central Bank later at which rates are expected to be left on hold.

The ECB is expected to keep interest rates unchanged at 1 percent and the focus will be on what follow-up measures the central bank will take after its historic injection of almost half a trillion euros of one-year funds last year.

The dollar <.DXY> rose 0.4 percent against a basket of major currencies.

A report by ADP Employer Services on Wednesday showed U.S. private employers slashed a bigger-than-expected 473,000 jobs in June, although the pace of private job losses slowed from May.

The focus is turning to next week's Group of Eight summit in Italy after G8 sources told Reuters that Beijing has asked for a debate on proposals for a new global reserve currency and the issue could be referred to briefly in the summit statement.

China's Vice Foreign Minister He Yafei said he had not heard of such a request but he said China hoped for diversification of the international currency system in the future and it would be normal for the issue to be raised at the G8 summit.

U.S. crude oil fell 0.3 percent to $69.10 a barrel.

The overall economic sentiments are very weak so oil prices could see more selling pressure. Furthermore, prices have also jumped more than 40 percent in the last quarter, so investors would be happy to lock in profits, said Benson Wang, trader at Commodity Broking Services in Sydney.

(Additional reporting by Joanne Frearson, editing by Mike Peacock)

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