MARKETS-OIL (UPDATE 4) * U.S. non-farm payrolls surprisingly weak * Brent crude holds above $90, Europe freezes * JP Morgan, Goldman see oil to average above $100 in 2011 (Update prices, adds detail) By Ikuko Kurahone LONDON, Dec 3 (Reuters) - Oil fell from two-year highs on Friday after closely watched U.S. jobs data missed expectations, while North Sea Brent crude futures held above $90 due to the extreme cold weather covering much of Europe. U.S. crude futures for January fell 17 cents to $87.83 a barrel by 1427 GMT, slipping back from the highest settlement price of $88.00 at Thursday's close. ICE Brent crude futures were trading at $90.61 a barrel, after briefly touching a fresh two-year high of $91.13 earlier on Friday. U.S. employment barely grew in November and the jobless rate unexpectedly jumped to a seven-month high. Non-farm payrolls rose 39,000, the Labor Department said on Friday. The unemployment rate was bumped up in November to 9.8 percent. "That was a very bad number," Thorbjørn Bak Jensen with Global Risk Management in Denmark said. Economists had expected payrolls to increase 140,000 last month and the unemployment rate to be unchanged at 9.6 percent. U.S. stock index futures fell and European shares turned negative following the jobs data. The dollar slipped against the yen and the euro. Further pressure on oil prices may come from China. There have been signs that China may tighten its monetary policy further. China will switch to a prudent monetary policy from a moderately loose stance, the Communist Party's top leaders decided on Friday, a change that could pave the way for more interest rate increases and lending controls, the state Xinhua news agency reported. China and the United States are the world's top two energy consumers. Any slowdown to its economy may dent its immediate energy demand and cap any gains in oil prices. ARCTIC WEATHER Still, oil is likely to mark a weekly gain this week as a slew of U.S. and Chinese economic data earlier in the week showed upbeat readings. North Sea benchmark ICE Brent crude has risen more sharply, gaining about 5.8 percent so far this week, due partly to the Arctic weather freezing most parts of Europe and boosting energy demand in the short term. The price structure of Brent futures has flipped into backwardation, or premiums on the prompt contract to longer-dated, which reflects the tightening of the immediate fundamentals. The recent gains to the peaks have prompted major banks, JP Morgan Chase and Goldman Sachs, to place their long-term oil price forecasts above $100 this week. JP Morgan and Deutsche Bank raised their price forecasts on Friday due to an expected increase in demand and drawdowns in inventories. Oil analysts led by Lawrence Eagles with JP Morgan raised its price forecasts for 2011 to an average $93 for U.S. crude and $95 for Brent and said prices would average $104 and $105 in 2012, respectively. (Reporting by Ikuko Kurahone; editing by Alison Birrane)

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