* Stocks stay on track for best week in eight
* Fed rate decision next week hangs in the balance
* Goldman cuts oil forecasts
By Jamie McGeever
LONDON, Sept 11 (Reuters) - Stocks and bond yields fell on Friday, but global equities remained on track for their biggest weekly gain in eight as investors grappled with the possibility of U.S. interest rates rising next week.
While next Thursday's eagerly anticipated decision from the Federal Reserve hangs very much in the balance, meaning the potential for market volatility remains high, stocks and bond yields have moved higher this week.
Reflecting the lack of uniform market thinking as the big day approaches, however, the dollar rose on Friday, although was on track for its first weekly decline in three.
"With a week to go until the Fed makes its decision, markets are likely to remain on edge with volatile moves possible in either direction," said Jasper Lawler, market analyst at CMC Markets.
Around midsession in Europe on Friday, shares were lower. The FTSEuroFirst index of leading 300 shares was down 0.7 percent at 1,405 points, but still up around 1 percent on the week, its best performance since mid-July.
Britain's FTSE 100 was down 0.4 percent at 6,132 points, Germany's DAX was down 0.8 percent at 10,135 points and France's CAC 40 was off 0.7 percent at 4,565 points.
U.S. stock futures slipped 0.3 percent, suggesting a weaker opening on Wall Street. The S&P 500 has bounced back from last week's 3.4 percent fall, however, and is well on track for its best week since July.
MSCI's broadest index of Asia-Pacific shares outside Japan slipped 0.2 percent, but was on for a rise of more than 2.5 percent on the week, its first weekly rise since mid-July and biggest weekly gain in five months.
Chinese shares ended another choppy week little changed on Friday. The Shanghai Composite Index rose 1.2 percent on the week, a welcome relief for investors after it had lost around 20 percent in the preceding three.
Chinese industrial output, retail sales and investment data on Sunday will give clues on whether the world's second-largest economy is continuing to lose momentum and help set the tone for markets next week.
GOLDMAN CUTS OIL FORECASTS
U.S. data on Thursday suggested the labour market was gaining momentum in early September as fewer Americans filed for weekly unemployment benefits. But a separate report showed weak inflation, further clouding the outlook for what the Fed will decide to do at its Sept. 16-17 policy meeting.
Considering volatile global equities, increasing uncertainty over China and emerging markets, and other major central banks around the world easing policy rather than tightening, it could be a high bar for the Fed to raise rates next week.