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* World shares dip but supported by growth outlook
* Spanish and Italian political fears hit bonds
* U.S. stocks seen retreating from 5-year highs
* Euro dips below $1.36, Oil falls $1 a barrel
By Richard Hubbard
London, Feb 4 (Reuters) - World equity markets and commodities fell on Monday after last week's strong gains, with a rise in political uncertainty in southern Europe worrying some investors and sending the euro lower.
U.S. shares were poised to join the slide when Wall Street reopens as the market retreats from the five-year highs hit on Friday.
The global economic outlook brightened substantially last week when data showed U.S. factory activity quickened in January and hiring increased, while a euro zone business activity survey suggested the worst of the region's downturn may be over.
On Sunday, China added to the optimism by reporting that its services sector had grown for a fourth straight month in January, although the slim gain also signalled that the global recovery underway is a modest one.
In Europe, political developments in Spain and Italy reminded investors that there were still many risks ahead, dampening the positive mood and encouraging some sellers.
Over the weekend Spain's opposition Socialist Party called on Prime Minister Mariano Rajoy to resign over a corruption scandal, as an opinion poll showed the lowest support on record for his centre-right People's Party (PP).
"If Rajoy were really forced to resign, if we were to have new elections in Spain, that would not help the improvement we've seen in financial markets," Tobias Blattner, European economist at Daiwa Capital Markets, said.
In Italy, former prime minister Silvio Berlusconi, one of the top candidates in this month's general election, is seeing a resurgence in popularity which threatens the reforms implemented by the outgoing technocrat government.
Spanish 10-year government bond yields rose 16 basis points to 5.38 percent on Monday, while equivalent Italian yields were 8 bps higher at 4.41 percent.
The yield gains reversed the strong start to the year on all Europe's peripheral debt markets helped by the easy supply of cash from central banks and the promise that the European Central Bank will buy bonds of struggling states if necessary.
Analysts said the yield hike may be more precautionary rather than a reflection of a significant change in sentiment.
"We're not getting any sense that people panicking or selling the market aggressively. It seems to be price action more than anything else, which reflects market nervousness and uncertainty," said Don Smith, an economist at brokers ICAP.
The better global economic outlook was still supporting a shift out of traditional safe-haven securities such as German and U.S. government debt.
Ten-year U.S. Treasury yields hit their highest level since April last year, rising 3.4 basis points on Monday to 2.06 percent, while equivalent German bonds gained 2.0 basis points to 1.69 percent.
The uncertainty in Spain and Italy, along with more weak Spanish employment data, drove the euro down against the dollar.
The common currency fell 0.5 percent to $1.3570, off a high of $1.3710 on Friday, its strongest level since late 2011.
Analysts said this too was likely to be only a temporary setback, and the euro would resume its move higher if, as expected, the ECB leaves interest rates unchanged on Thursday and does not express any concerns about the recent gains.
"Once the ECB fails to cut rates on Thursday, which is our view, the euro will be free to move higher again, but with the uncertainty surrounding the meeting the euro will likely weaken slightly or trade sideways," said Adam Myers, senior FX strategist at Calyon.
Equity markets were looking to consolidate after the strong economic data last week had taken many market benchmark indexes to fresh multi-year highs.
MSCI's world equity index dipped 0.25 percent on Monday, still not far from a 23-month peak and just a few points shy of its best level since 2008.
The FTSEurofirst 300 index of top European shares fell one percent to just under a two-year high, while Germany's DAX dipped 1.6 percent to 7,703 points, moving away from its 2007 all-time high of 8,151.
Rising confidence in the global economic recovery was also underpinning commodities such as oil and copper, although prices moved in narrow ranges at the start of a week when several major central banks hold policy meetings.
Brent crude was 78 cents lower at $115.98 per barrel down from a 4-1/2 month high of $117.07 on Friday, while U.S. crude futures fell more than $1 per barrel as the oil market consolidated after eight weeks of rapid rises, its longest winning streak since July-August 2004.
"The market is long due a correction. Still, there is no point standing in front of a moving train," VTB Capital oil strategist Andrey Kryuchenkov said.