* German yields dip ahead of U.S. jobs data

* Set for biggest weekly rise since Pfizer vaccine news

* Fitch to review Italy's credit rating

AMSTERDAM, Dec 4 (Reuters) - German bond yields dipped modestly in early trade, following U.S. Treasuries, as markets awaited a U.S. employment report that is expected to show the world's biggest economy added far fewer jobs in November than in the previous month.

After surging earlier in the week on bets that a U.S. stimulus package -- back on the cards -- would help push inflation higher, U.S. Treasuries drifted lower on Thursday in anticipation of the jobs report.

German benchmark 10-year bond yields, which had followed Treasuries higher but then retraced much of their rise on Thursday, were down about 1 basis point in early Friday trade to -0.56%

"Our economists are looking for a weak payrolls print which should take some momentum out of the U.S. reflation sentiment," Michael Leister, head of interest rate strategy at Commerzbank told clients.

Still, up 3 basis points this week, German 10-year yields were on track for their biggest weekly rise since Pfizer announced three weeks ago that its vaccine was highly effective against coronavirus. Bets that the vaccine would prove key in helping the global economy had pushed safe-haven 10-year Bunds after Pfizer's announcement to their worst session since March.

Other overnight headlines are also likely to have contributed to Friday's mixed market sentiment.

The Wall Street Journal reporting challenges in Pfizer's supply chain for its COVID-19 vaccine played a role in its decision to slash its 2020 production target, which pushed the S&P 500 lower on Thursday.

Some good news came from the European Union's coronavirus recovery fund, after Poland's deputy prime minister said it would be ready to drop its veto on the EU budget and the fund if EU leaders endorse an explanatory declaration on the link between disbursements and the rule of law -- the cause of Hungary and Poland's veto.

However, the news had little impact on southern European borrowing costs, which have been mostly driven by expectations of additional stimulus at the European Central Bank's meeting next Thursday.

Some investors are focused on a Fitch Ratings review of Italy that is due out later on Friday.

In April Fitch downloaded Italy's credit rating to one notch above junk at BBB- and has been more proactive than other rating agencies in downgrading sovereigns during the COVID crisis. But analysts don't expect it to take action now that EU and ECB policy support is firmly in place.

Italy's borrowing costs seem to reflect that view, with its 10-year yield last down 1 basis point to 0.56%.

(Reporting by Yoruk Bahceli Editing by Gareth Jones)