World stocks mostly down ahead of key US jobs data

[December 04, 2009]  LONDON (AP) -- World stocks mostly fell Friday ahead of a key U.S. jobs report that investors watch closely for signs of recovery and which could well set the market tone for the rest of the year.

In Europe, the FTSE 100 index of leading British shares was down 32.63 points, or 0.6 percent, at 5,280.37 while Germany's DAX fell 39.10 points, or 0.7 percent, at 5,731.25. The CAC-40 in France was 16.53 points, or 0.4 percent, lower at 3,782.58.

Earlier in Asia, Hong Kong's Hang Seng closed down 55.72 points, or 0.3 percent, to 22,498.15, but Japan's Nikkei 225 stock average bucked the trend and ended 44.92 points, or 0.5 percent, to 10,022.59.

All eyes are on the U.S. nonfarm payrolls report for November -- data that often affects investor sentiment for a week or two. If traders conclude the U.S. economy is losing steam, that could pave the way for a bout of profit-taking following an eight-month bull run.

The consensus is that November U.S. non-farm payrolls fell by around 125,000, but that the unemployment rate held steady at a 26-year high of 10.2 percent. However, some soft economic data this week has raised fears that the payrolls may decline by 160,000 and the unemployment rate may tick up.

"Any overshoot here could heap pressure on the downside going into the weekend break, not least as volumes start to dry up as we wind down to Christmas," said Ben Potter, research analyst at IG Markets in Melbourne, Australia.

Though technically out of recession, the U.S. economy has continued shedding jobs, and with the employment data in recent months coming in worse than expectations, investors are in jittery mood.

"The employment figures have not made pleasant reading recently and so traders will be preparing themselves for a poor number," said Arifa Sheikh-Usmani, a trader at Spreadex.

Wall Street was expected to open largely flat but that will undoubtedly change should the jobs data -- due at 1330 GMT, an hour before the bell -- deviate dramatically from consensus.

By mid morning London time, Dow futures were up 4 points at 10,356 while the Standard & Poor's 500 futures rose 0.7 point to 1,098.70. On Thursday, U.S. stocks closed around a percent down after a bout of late selling.

It's not just stock markets that will be closely monitoring the data.

In the currency markets, a better than expected report may further fuel hopes in the markets that the U.S. economy is recovering from recession stronger than anticipated. That could well prompt a rise in investors' appetite for risk, which in the current climate could hurt the dollar, which earlier this week fell to a 14-year low against the yen and just short of a 16-month low against the euro.

By mid morning London time, trading in the currency markets was fairly subdued, with the dollar down 0.1 percent at 88.14 yen but the euro 0.1 percent higher at $1.5070.

Any fluctuations in the dollar later could also impact heavily in energy and commodity markets.

Gold was unchanged at $1,217.40 an ounce while benchmark crude for January delivery was down 47 cents to $75.99. The contract gave up 14 cents Thursday.

Elsewhere in Asia, Australia's market dropped 1.5 percent while Taiwan's market shed 0.4 percent.

However, Shanghai's market gained 1.6 percent and South Korea's Kospi rose 0.6 percent after the government said the economy, Asia's fourth largest, expanded a revised 3.2 percent in the third quarter. That was a better performance than initially estimated thanks to stronger growth in manufacturing, exports and services.

[Associated Press; By PAN PYLAS]

AP Business Writer Jeremiah Marquez in Hong Kong contributed to this report.

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