Concerns over the global economy weighed on markets Friday ahead of key U.S. jobs figures that often set the market tone for a week or two after their release.
A week after a European Union summit that was generally seen as a step in the right direction to resolve Europe's debt crisis, investors have turned cautious once again. Instead of cheering the rate cuts in Europe and China on Thursday, investors worried that the activism of the central banks may be an indicator of a more parlous economic outlook.
If the U.S. nonfarm payrolls data later disappoint again, then those worries could turn decidedly worse.
Ahead of the figures, stocks in Europe were trading marginally lower. Germany's DAX was down 0.3 percent at 6,516 while the CAC-40 fell 0.3 percent at 3,220. The FTSE 100 index of leading British shares was 0.2 percent lower at 5,682.
Wall Street was poised for a slightly lower opening, though how U.S. markets open will obviously depend on the payrolls figures, released an hour before the bell.
Since the June figures are the last payrolls data before the U.S. Federal Reserve meets again, a bad number may prompt investors to conclude that the Fed may join in the latest bout of central bank activity.
"Another poor jobs number could well raise expectations of further Fed easing," said Michael Hewson, markets analyst at CMC Markets. "Given the market reaction to the combined central bank efforts yesterday you have to ask yourself how effective any Fed action would be."
However, an upbeat report from the ADP payrolls firm on Thursday provided some hopes that the government data later may be better than the 100,000 increase markets are predicting. A surprisingly large 176,000 increase in private payrolls in June has prompted many analysts to raise their expectations for the official data later.
"The number, critically important during the calmest of times, carries with it even more significance than normal courtesy of recent central bank activity," said David White, a financial trader at Spreadex.
The dollar was also fairly flat ahead of the data, following its big advance against the euro on Thursday as worries over Europe's economy undermined the single currency. The euro was flat at $1.2390 in late morning trading in London.
Earlier in Asia, markets had their first chance to respond to Thursday's central bank moves, and in particular the People's Bank of China's surprise decision to cut interest rates again for the second time in a month.
As in Europe and the U.S., the response was lackluster as investors worried that the rate cut was a signal from the Chinese monetary authorities that the slowdown in the world's second-largest economy may be more pronounced than already thought.
Japan's Nikkei 225 index fell 0.7 percent to 9,020.75 and Hong Kong's Hang Seng was marginally lower at 19,800.64.
South Korea's Kospi slipped 0.9 percent to 1,858.20. Australia's S&P/ASX 200 dropped 0.3 percent to 4,157.80. China's Shanghai Composite added 1 percent to 2,223.58.
Oil prices dropped amid the global growth worries — benchmark oil for August delivery was down $1.06 at $86.16 a barrel in electronic trading on the New York Mercantile Exchange.
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