* Non-farm payrolls expected to come in at 178,000
* Dollar edges up from 3 week low
* Britain's FTSE lingers below record
By Alistair Smout
LONDON, Jan 6 World stocks held
near 1-1/2 year highs and the dollar moved up from a three-week
low on Friday, with investors looking ahead to U.S. jobs data to
provide clues on the pace of U.S. interest rate rises this year.
MSCI's gauge of the world's stock markets hit its highest
since July 2015, taking its gains so far this year to 1.7
percent, helped by this week's generally upbeat economic
readings in the U.S., China and Europe.
Asian shares recovered to four-week highs, while the
pan-European STOXX 600 dipped 0.3 percent, just 0.7
percent off a 1-year high hit this week.
Wall Street futures indicated a flat open ahead of the
release of U.S. jobs data due out at 1330 GMT.
A Reuters survey of economists signalled that U.S. employers
were likely to have maintained a solid pace of hiring in
December while raising wages, putting the economy on a path to
stronger growth and further interest rate increases this year.
Non-farm payrolls probably increased by 178,000 jobs last
month, the survey showed.
Federal Reserve minutes from December released this week
showed that almost all Fed policymakers thought the economy
could grow more quickly because of fiscal stimulus and many were
eyeing faster interest rate rises than previously expected.
Despite this, investors have scaled back expectations for
the number of rate rises this year since December, and the
dollar is down from this week's 14-year high.
The currency slumped 1.6 percent on Thursday to a three-week
low of 115.04 yen, its biggest fall for five months. It
bounced back 0.5 percent on Friday to 115.93 yen.
Weaker-than-expected private-sector ADP payrolls data on
Thursday contributed to the dip in the dollar, despite other
strong U.S. data. Investors were looking to today's jobs figures
to see if the bounceback for the dollar could be sustained.
"It's likely that a stronger jobs number will, in the
shorter term, strengthen the dollar. But (soon) people will
start questioning how much of a strong dollar the Fed can
stomach," ETF Securities' head of research and investment
strategy, James Butterfill, said.
"Given the sell-off in the dollar, there could be
appreciation over the next few weeks, but in the coming few
months we could see further dollar weakness."
The dollar's index against a basket of six major currencies
was up 0.1 percent at 101.640, down more than two
percent from Tuesday's 14-year high of 103.82.
The dollar bounced back slightly against the yuan
, which gave up some of the massive gains made in the
previous two days despite Friday's strong midpoint fixing by
China's central bank.
The recent surge in the dollar and its borrowing costs
sparked by Donald Trump's election victory has eased, with the
U.S. 10-year yield slipping to one-month lows.
Trump's victory had sparked a major realignment in markets.
Expectations that his administration will bring tax cuts, higher
spending and deregulation have boosted U.S. bond yields and the
dollar, to the detriment of many emerging economies that have
benefitted from cheap dollar funding and had attracted trillions
of dollars from investors shunning low U.S. yields.
While U.S. yields have slipped, concerns over rising
inflation were prevalent in the euro zone, where government bond
yields were set to end the first trading week of the year with
their biggest weekly rise for at least a month.
The euro edged down 0.1 percent to $1.0591 having
posted its biggest gain for 7 months in the previous session.
The retreat in U.S. bond yields has supported gold this
week, and bullion was up 2.3 percent for the week, set for its
biggest weekly gain in two months, but down 0.2 percent on the
day ahead of the U.S. data.
That weighed on Britain's commodity-heavy FTSE 100,
which lingered below record highs.
Having closed 2016 at an all-time high, the British
blue-chip index has hit two new record peaks this week already,
but was last down 0.1 percent.
Oil prices were steady as Saudi Arabia and Abu Dhabi started
promised supply cuts, but doubts that all producers will
implement output reductions agreed in a landmark OPEC deal last
year kept markets from rising further.
International benchmark Brent crude futures traded
up 0.2 percent at $56.97 per barrel.
(Additional reporting by Hideyuki Sano in Tokyo)