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updated: 1/4/2013 6:41 AM

World markets stall ahead of US jobs data

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Associated Press

BANGKOK -- European stocks traded listlessly Friday as investors awaited key U.S. jobs data for a fresh reading on the health of the world's largest economy. Shares in Japan soared in the first trading there in 2013.

Investors in Japan were reacting to a weakening yen and Washington's temporary skirting of the so-called fiscal cliff in a catchup rally on the first trading day of the year in Tokyo.

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But European and U.S. markets have already moved on from the New Year rally, with major indexes edging lower. Stocks were weighed down by news that some officials at the U.S. Federal Reserve favored ending extraordinary stimulus measures this year. Additionally, eurozone purchasing manager's surveys showed only small improvements in the struggling currency union's economy.

By midday in Europe, Britain's FTSE 100 was 0.1 percent lower at 6,042.95. Germany's DAX shed 0.2 percent at 7,741.23 and France's CAC-40 was 0.4 percent lower at 3,705.16. Wall Street looked set for a mixed open. Dow Jones futures fell 0.1 percent to 13,311 while S&P 500 futures rose a similarly tiny 0.03 percent to 1,454.

Japan's benchmark stock index soared on its first trading day of the new year Friday as investors belatedly joined the rally over the last-minute budget deal reached in Washington to avoid steep, automatic tax increases and spending cuts that would have taken effect Tuesday. The measure, however, was largely seen as crisis avoidance -- and puts off hard decisions about how to reduce government spending and deal with America's massive debt.

In Tokyo, the Nikkei 225 jumped 2.8 percent to 10,688.11, its highest closing in 22 months. Much of the enthusiasm for Japanese shares comes from the steadily weakening yen, a big help to Japanese companies that sell abroad.

Investors have high hopes that new Prime Minister Shinzo Abe's policies, centered on loose monetary policy and public spending, will pull the world's third-largest economy out of the doldrums.

Export shares boomed. Suzuki Motor Corp. soared 7.9 percent, Nikon Corp. advanced 5.2 percent and Toyota Motor Corp. jumped 6.4 percent.

Elsewhere, however, investor fervor wilted. Hong Kong's Hang Seng index fell 0.3 percent to 23,331.09. South Korea's Kospi lost 0.4 percent to 2,011.94, while Australia's S&P/ASX 200 shed 0.4 percent to 4,723.80. China was mixed.

Wall Street stocks tumbled on Thursday after a transcript of the last meeting of the U.S. Federal Reserve unveiled a divided opinion among central bankers over how long the Fed should keep buying bonds to support the economy.

Investors awaited the U.S. monthly jobs report based on non-farm payrolls due later in the day. The figures often move markets because they are a key indicator for the health of the U.S. economy, which has struggled to accelerate in recent months.

Market expectations were that about 150,000 jobs were added, though the consensus reflects widely varying estimates due to uncertainty over how much the fiscal cliff debate may have weighed on job creation.

"A soft payrolls figure would probably be dismissed as distorted by the uncertainty of the cliff, but a strong figure would be less easy to dismiss and would probably provoke a bigger market reaction," said Adam Cole at RBC Capital Markets.

Benchmark oil for February delivery fell $1.24 cents to $91.68 per barrel in electronic trading on the New York Mercantile Exchange.

In currencies, the euro fell 0.3 percent $1.3003. The dollar rose 1.1 percent against the Japanese yen to 88.22 yen.

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