(Correct paragraph 15 to show futures losses not gains)

By Jeremy Gaunt, European Investment Correspondent

LONDON, Sept 4 (Reuters) - Global equities hit a new two-year low on Thursday as central banks in Britain and the euro zone kept interest rates on hold and a U.S. report pointed to a deteriorating jobs market.

The dollar steadied against major currencies and Wall Street looked set for poor start.

MSCI's main world stock index <.MSCI00000PUS> dropped a quarter of a percent and hit its lowest level since September 2006.

The European Central Bank and Bank of England both left rates steady at 4.25 percent and 5.0 percent, respectively.

"The ECB just raised rates two months ago, so there is no way they could have cut rates now. And to raise with the economy slowing faster than they expected when they raised rates in July would make no sense either," Bank of America economist Holger Schmieding said.

Differing economic and rate prospects have been driving the dollar higher in recent weeks as the U.S.-triggered economic downturn spreads to the euro zone and Britain.

The dollar stabilised against a basket of major currencies <.DXY> but was weaker against the pound.

The euro <EUR=> brought $1.4484, roughly unchanged and the pound <GBP=> fetched $1.7806, a gain of about a third of a percent.

Britain's currency woes continued, however, as sterling hit a 12-year low against a trade-weighted basket of currencies <=GBP> before coming back.

"Sterling still has a downside, data has been poor, and people are speculating that the BoE will cut rates this year," said Paul Robson, strategist at RBS.

"It's the same sterling weakness story from yesterday, the day before, and for the whole year, as a matter of fact."

STOCK WOES

Downbeat sentiment continued to play on world equity markets.

The FTSEurofirst 300 index <.FTEU3> of pan-European shares was down 0.2 percent. Japan's Nikkei average <.N225> earlier fell 1 percent to a five-month low.

"There are many worrying factors in the market, such as the global economic outlook and the credit crunch."" said Katsuhiko Kodama, senior strategist at Toyo Securities.

U.S. stock index futures added to losses after an ADP Employer Services report showed U.S. private employers cut 33,000 jobs in August.

Oil prices firmed slightly to around $110 a barrel as traders weighed concerns over slowing demand from major consumer countries against further hurricane threats to the U.S. oil sector.

Prices have tumbled by more than $6 since Friday after Hurricane Gustav, which swept through the major oil-producing Gulf of Mexico and made landfall near New Orleans on Monday, turned out to be less destructive than feared.

"There are still concerns over supply issues. A lot of the Gulf of Mexico capacity was shut down and some refineries are still closed. We don't know how long they'll remain offline," said Gerard Rigby, an analyst at Fuel First Consulting in Sydney.

Euro zone government bond yields fell.

Two-year Schatz yielded 4.116 percent <EU2YT=RR>, 1 basis point less than in late Wednesday trade, while 10-year Bund yields <EU10YT=RR> were about 2 basis points lower at 4.117 percent. (Additional reporting by Naomi Tajitsu and Emelia Sithole-Matarise; Editing by Victoria Main) (([email protected]; +44 207 542 1028; Reuters Messaging: [email protected]))

Keywords: MARKETS GLOBAL