Updates at 0820 GMT

By Huw Jones

LONDON, Aug 9 (Reuters) -Global shares firmed on Friday, capping a rollercoaster week on a calmer footing after U.S. jobs data eased concerns that the world's biggest economy was headed for a hard landing.

Stocks in Japan and elsewhere in Asia gained, taking their cue from a Wall Street bounce back on Thursday when data showed U.S. jobless claims fell more than expected last week, suggesting fears the employment market is unraveling were overblown.

Figures showing that China, the world's No. 2 economy, is taking a step back from deflation, also underpinned the better mood after sharp falls in stock benchmarks globally earlier in the week.

Oil prices LCOc1 headed for weekly gains of around 3% as fears of a widening Middle East conflict persisted.

The MSCI All Country stock index .MIWD00000PUS, was up 0.3% at 784.4 points, recovering much of the ground lost during the week.

The benchmark is 5.7% below its lifetime high of 832.35 reached on July 12, though still up 7.5% for the year.

In Europe, the STOXX .STOXX index of 600 companies was up 0.7%, with the loss for the week all but erased.

In a sign of calmer nerves, the VIX .VIX index, also known as Wall Street's 'fear gauge', was in negative territory, a far cry from its record one-day spike on Monday.

Divergent central bank interest rate moves, a repricing of recession probability in the United States, thinner liquidity in August accentuating volatility, and Middle East tensions all combined to put the brakes on a months-long winning streak in stocks to record highs, analysts said.

"We are still in the month of August, so we can still have some volatility," said Marie de Leyssac, portfolio manager at Edmond de Rothschild Asset Management.

Investors will continue to study employment data, keep an eye on the Bank of Japan, and particularly on the annual meeting of global central bankers hosted by the Kansas City Fed in Jackson Hole later this month, she said.

"This year I think it is a really important meeting because we will have more insight into what (Federal Reserve Chair) Jerome Powell sees for the future, and maybe more insight on the path to lower rates," de Leyssac said.

Wall Street stock index futures NQcv1, EScv1 were firmer, with no major U.S. data expected on Friday.

NIKKEI RECOVERS

The BOJ's reassurance that it will not be hiking interest rates amid market volatility helped sentiment recover.

Japan's Nikkei.N225 stocks benchmark closed 0.6% higher, erasing most of the losses since a 12.4% crash on Monday.

The yen JPY=EBS also veered from negative to positive through the session, last trading at 147 per dollar.

MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS climbed 1.8%, more than reversing the drop from Thursday. For the week, it has reversed earlier losses to be largely flat.

Also helping sentiment is Chinese data showing that consumer inflation ran at 0.5% in July, above forecasts of a gain of 0.3%, suggesting there is less risk of the economy sliding into outright deflation.

"The prospect of better-than-feared U.S. growth and a weaker yen constrain the fundamental and technical risks that inspired the extreme volatility experienced at the start of the week," said Kyle Rodda, a senior financial market analyst at Capital.com.

Some Federal Reserve officials said they were increasingly confident that inflation is cooling enough to allow interest-rate cuts ahead, but not because of the recent market rout.

The U.S. dollar gained as markets gave up bets on an emergency rate cut from the Fed, and is set for a 0.4% gain on yen this week, despite Monday's precipitous 1.5% plunge. FRX/

Bond yields have climbed this week with safe havens in less demand. U.S. 10-year yields US10YT=RR held at 3.9627%, well off Monday's low of 3.667%, and were set for a weekly gain of about 20 basis points.

Two-year yields US2YT=RR were trading at 4.0282%.

Brent crude futures LCOc1 were trading little changed at $79.10 a barrel, but were up more than 3% for the week, while U.S. West Texas Intermediate crude CLc1 were flat at $76.11, also up over 3% for the week.

Gold prices eased slightly to trade at $2,424 an ounce, and heading for a drop on the week. XAU=

Reporting by Huw Jones, additional reporting by Stella Qiu; Editing by Stephen Coates

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