* Dollar on defensive as US govt stays shut, debt ceilinglooms
* Stocks, bonds see silver lining in cbank stimulus, Chinesedata
* Wall Street seen opening 0.2 pct lower
By Marc Jones
LONDON, Oct 3 (Reuters) - The dollar hovered at aneight-month low on Thursday as the U.S. government shutdowndragged on, though stocks drew comfort from the view that majorcentral banks may now have to keep monetary policy super-loosefor longer.
Also aiding sentiment was a hit of solid euro zone data andan upbeat survey on China's huge services sector, which helpedbalance disappointing manufacturing figures earlier in the week.
Markit's euro zone services Purchasing Managers Index, amonthly survey of businesses, rose to 52.2 in September fromAugust's 50.7, while retail sales in the bloc posted theirsecond robust monthly rise on the trot.
That left the euro pushing a new eight-month highagainst the dollar, which was sapped by the lack of progress inU.S. budget talks.
U.S. jobless claims came in below economists' expectations,but only briefly lifted the dollar against the yen.
And with no obvious opportunities for a breakthrough on thegovernment shutdown on Thursday, stock futures pointed to theS&P 500 and Dow Jones industrials opening downaround 0.2 percent and facing the prospect of a ninth session in11 in the red.
"The U.S. fiscal uncertainty is still the main thing that isweighing on stocks," said Societe Generale strategist Alvin Tan,adding that the dollar's weakness and the euro's rise were downto a combination of factors.
"It was a bit of a follow-on from the ECB meeting yesterdaywhere Draghi - we think wrongly - was perceived by the market asgiving the green light to euro strength. And this morning wehave had some good data."
After Thursday's jobless claims data markets would normallynow be gearing up for the more important non-farm payrollsfigures later in the month, but with the government statisticsdepartment part of the U.S. shutdown the data is likely to bedelayed.
World stocks were holding up overall despiteall the U.S. uncertainty.
Asian shares ex-Japan ended 0.1 percent higher and Europeanstocks inched up ahead of the U.S. restart as London's FTSE and the second day of outperformance by Italian shareshelped offset weakness in Paris and Madrid.
A meeting between U.S. President Barack Obama andcongressional leaders late on Wednesday produced only blame andcounter-blame, dimming hopes of an early end to the budgetimpasse.
So far, investors have been betting a budget deal would bereached in time to avoid lasting damage to the economy, althougha potentially riskier fight over the U.S. debt ceiling looms.
Philip Marey, a senior U.S. economist at Rabobank, saidworries will only intensify the nearer Washington gets to theOct. 17 deadline when it will effectively run out of cash -raising prospects of an unprecedented default which the marketfor now assumes is unthinkable.
"I think at the most 100 basis points (drop in Treasuryyields) but more likely 70 or 80 basis points." For stockmarkets like the benchmark S&P 500. "It could be something like100 points," he added.
Already one effect has been to further cloud the outlook forwhen the Fed will start scaling back bond purchases.
Eric Rosengren, head of the Federal Bank of Boston, said onWednesday that the government shutdown could further delay atapering because of a lack of official data on the economy.
That only amplified the startling swing in market thinkingabout the future course of U.S. interest rates. Just a monthago, the futures market had predicted the Fed funds ratewould be up around 1.465 percent by the end of 2015. Now itimplies a rate of just 0.745 percent.
That in turn has helped drag yields on the benchmark 10-yearU.S. Treasury note down, with them last at 2.6428percent, from a September peak of 2.99 percent.
Bund yields, which move inversely to prices,inched up in trading thinned by a German public holiday whilemost other euro zone yields also edged higher as the upbeat eurozone data left investors favouring shares.
In contrast to the increasingly dovish outlook for U.S.rates, the European Central Bank (ECB) on Wednesday leftinterest rates unchanged and gave no hint it was considering anyimminent policy easing despite insisting the option remains.
The dollar's diminishing yield advantage saw it slide to anew eight-month trough against a basket of currencies going aslow as 79.740 before clawing back to last trade at79.855.
At the same time the euro climbed to an eight-month high at$1.3625, bringing it in sight the 2013 peak of $1.3711though it had settled back at $1.3600 as U.S. trading picked up.
"At face value, the commentary from the ECB sounded ratherdovish," said BNP Paribas economist Ken Wattret. "It wasapparently not dovish enough, however, with markets continuingto view the ECB's position as one of 'all talk and no action'."
KIWI SHOOTS UP
The dollar did gain some traction on the yen, but onlybecause Japanese investors were selling their currency foreuros. Thus while the dollar steadied at 97.61 yen, theeuro rose more than half a yen to 132.88.
A notable southern hemisphere mover was the New Zealanddollar, which rallied after the country's central bank saidlarger increases in interest rates would be needed if new limitson mortgage lending failed to cool the housing market.
The kiwi jumped to $0.8308, pulling well away froma low of $0.8194 plumbed on Wednesday.
Trading was very choppy in commodity markets, though the lower dollar tended to support prices.
Gold steadied at $1,310 ounce, having bouncedfrom a low of $1,278.24 on Wednesday while copper futures wobbled after gains in Asia to stand at $7,255.50 atonne.
Oil prices held their ground after a jump on Wednesday.Brent crude for November shrugged off some earlysoftness to steady at $109.20 a barrel, though the weak dollarsaw U.S. crude slip 32 cents to $103.78.
- government shutdown