Asian markets steadied on Friday as Japanese shares recouped early losses, though investors were pensive ahead of jobs data that could make or break the case for an imminent scaling back in U.S. stimulus.
Defying a soft finish on Wall Street, Tokyo's Nikkei edged up 0.2 percent in morning trading, recouping a little of the 3.6 percent loss suffered in the previous two sessions.
Dealers said offshore investors remained buyers of exchange-traded funds and index heavyweights such as Softbank (9984.T) in the firm belief the Nikkei is on a sustained uptrend given the determination of the Bank of Japan to beat deflation.
The same reasoning led to fresh selling of yen which nudged the dollar back up to 101.90 yen after a couple of days of decline. Shares across the region seemed to take some heart and MSCI's broadest index of Asia-Pacific shares outside Japan turned flat after an early dip.
The lead from Wall Street was again less than helpful with the Dow Jones and the S&P 500 both ending down 0.43 percent.
That marked a fifth straight day of losses as investors fretted about the risk the Federal Reserve will begin to taper its monthly debt purchases of $85 billion at its policy meeting on December 17 and 18.
Crucial to that decision could be the payrolls report for November due later Friday. The median forecast is for an increase of 180,000 in payrolls with the jobless rate steady at 7.2 percent.
The market would tend to see anything over 200,000 as greatly adding to the chance of a tapering this month, while a result under 150,000 would diminish the risk.
Still, it is worth remembering that total U.S. employment is over 136 million so the difference in a monthly rise in jobs of 150,000 or 200,000 is statistically insignificant, yet it has the power to move markets massively.
Not helping was that Thursday's U.S. data seemed strong on the surface but the detail was not so positive. While economic growth was revised up to an annualised 3.6 percent for the third quarter, all the increase came in a build up of inventories.
That led analysts to assume inventories would be run down this quarter and thus drag on growth. Indeed, economists at Westpac saw a chance that the economy might actually shrink.
"We are not forecasting recession, but don't use these apparently solid GDP data as evidence tapering is imminent," they wrote in a note to clients.
Yet the headline growth number was enough to send yields on the benchmark 10-year U.S. Treasury note up near a three-month high of 2.87 percent.
For once, the rise in yields did not lift the U.S. dollar, in part because European yields jumped even more after European Central Bank President Mario Draghi sounded in no hurry to take further stimulative action.
In particular, the market was spooked when Draghi played down the need for another long-term liquidity operation (LTRO). Dealers had been hoping for just such an operation to ease a liquidity squeeze over year end.
As a result yields on two-year German government debt spiked to 21 basis points, from just 12 at the start of the week, and took the euro higher in their wake.
Early Friday, the single currency was up at $1.3663 having finally smashed through tough resistance at $1.3620. The next chart target was $1.3705/18, which would not be too distant from the 2013 peak of $1.3832.
Against the yen, it edged up to 139.24, but struggled to break above a five-year peak of 140.03 set earlier in the week.
In commodity markets, spot gold was up 0.25 percent at $1,227.65 an ounce, but was still 2 percent lower for the week.
Nymex crude was off 5 cents at $97.33, but still up 5 percent for the week so far thanks to a drop in U.S. crude stocks. Brent crude was off 4 cents at $110.94, but again still up for the week.