* Labour market lacks vigour for Fed to scale back stimulus * U.S. dollar near 3-1/2 low against other currencies * New outage at North Sea Buzzard oilfield * Coming Up: U.S. Non-farm payrolls; 1230 GMT (Updates prices, edits paragraph 6) By Julia Payne LONDON, June 7 (Reuters) - Brent futures rose above $104 a barrel on Friday, supported by a sharp fall in the dollar and expectations of ongoing U.S. economic stimulus, putting the contract on course for its biggest weekly gain since late April. U.S. employment data is due later and will be watched to gauge the health of the world's biggest economy. Initial job numbers on Thursday pointed to moderate growth, but were likely not strong enough to convince the Federal Reserve to scale back the amount of cash it is pumping into the banking system. Crude gained further support from a report showing a drawdown in U.S. oil stocks. Brent crude gained 51 cents to $104.14 a barrel by 1135 GMT, while U.S. oil rose 49 cents to $95.22. Both contracts are set for their biggest weekly gain since the week ended April 26, with the European benchmark set to rise 3.4 percent and its U.S. counterpart 3.2 percent. "Today the focus will naturally be on the non-farm payrolls and the numbers will be followed by a lot of comments about whether it increases or not the chance of the U.S. Fed slowing down on its QE (quantitative easing) program," Olivier Jakob, analyst at Petromatrix said. The dollar hovered near a 3-1/2 month low against a basket of currencies, supporting oil, as a soft dollar makes commodities priced in the greenback cheaper for holders of other currencies. DEMAND OUTLOOK The Fed's policy-setting committee meets June 18-19. With data ranging from manufacturing to consumer spending showing the economy hit a soft patch early in the second quarter, it is unlikely the U.S. central bank will announce at that meeting a tapering of the $85 billion in bonds it is buying each month. Brent was also supported by news that the Buzzard oilfield in the UK North Sea has suffered a production outage, the second in less than a week. The field's normal production is about 200,000 barrels per day. News of a fall in U.S. oil inventories also supported prices, particularly the U.S. benchmark. Crude inventories at the Cushing, Oklahoma, oil hub declined more than 1 million barrels between May 31 and June 4, energy industry intelligence service Genscape reported. (Additional reporting by Manash Goswami in Singapore; editing by Jason Neely)

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