LONDON, Aug 10 (Reuters) - The dollar and European stocks slipped on Monday after a strong performance last week following better-than-expected U.S. jobs data, while Tokyo shares hit a 10-month closing high. Investors are reluctant to add significant risk to their portfolio after a broad-based rally on Friday following the U.S. jobs report for July, which gave a clear indication the economy is turning around from a deep recession. The benchmark MSCI world equity index has climbed for four weeks in a row, rising 1.7 percent the previous week, and is up 19 percent since the start of the year. "A time has to come when the market has to give up a little bit of ground. (Stocks) have done incredibly well, much better than most of us had expected," said Mike Lenhoff, strategist at Brewin Dolphin. The MSCI world equity index was up 0.1 percent, after hitting its highest level since October on Friday. The FTSEurofirst 300 index fell 0.7 percent, dragged lower by auto and basic resource shares. U.S. stock futures were down around a quarter percent, pointing to a weaker open on Wall Street later. In Tokyo, the Nikkei average hit its highest close in 10 months. Japan's machinery orders, a leading indicator of capital spending, rose in June for the first time in four months. Emerging stocks rose 0.4 percent. The dollar was down 0.2 percent against a basket of major currencies. The U.S. currency fell 0.4 percent to 97.27 yen. Investors are also awaiting the outcome of the Federal Reserve' monetary policy meeting later in the week especially after increasing bets on the central bank to raise interest rates this year following the U.S. jobs data. The implied chances the Fed would raise the cost of borrowing from 0-0.25 percent by the year-end rose as high as 46 percent from 34 percent shortly before the data. The dollar has tended to fall after upbeat economic data, although that dynamic could be changing as the market speculates that interest rates could rise sooner than expected. "The Fed is the big question later in the week ... Do they extend their buy-back programme or not? If they do, there could be a potentially big impact on the dollar (downwards), and if they don't, it could go the other way," said Martin McMahon, currency strategist at Credit Suisse in Frankfurt. U.S. crude oil fell 0.2 percent to $70.77 a barrel. The September Bund future rose 14 ticks as equities slipped. Investors are bracing for hefty U.S. and euro zone issuance this week skewed towards 10-year maturities. The U.S. Treasury will auction $75 billion in new government bonds while Germany is due to issue 6 billion euros of the benchmark 10-year paper on Wednesday. (Additional reporting by Joanne Frearson and Naomi Tajitsu; editing by Chris Pizzey)

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