World stocks pushed higher on Friday after better-than-forecast U.S. retail sales suggested the world's biggest economy was stabilizing while the dollar held broadly steady ahead of U.S. jobs data.
The gains in world stocks undermined bids for lower risk U.S. Treasuries and euro zone government bonds but the dollar held steady with some in the market speculating that forecasts on the scale of job losses may have been too pessimistic.
Non-farm payrolls, due at 1330 GMT, is expected to show a loss of 50,000 jobs in February, compared with 20,000 job cuts in January, a Reuters poll shows.
The overwhelming focus of the day ahead lies with the US payrolls report. Weather-related distortions could make this even more unpredictable than usual, said Nomura analyst Sean Maloney.
TheMSCI world equity index <.MIWD00000PUS> rose 0.3 percent while the FTSEurofirst 300 index <.FTEU3> added almost half a percent, on course for a sixth straight day of gains.
The euro edged up 0.1 percent against the dollar to $1.3595, steadying after dropping to $1.3549 on Thursday as European Central Bank President Jean-Claude Trichet said a recovery in the euro zone would be uneven.
The dollar was stable versus a basket of currencies at 80.510 <.DXY>, ahead of the U.S. employment report but it rose against the yen after a report suggesting the Bank of Japan was considering further easing measures.
The non-farm payrolls data is in focus, and we expect a number roughly in line with consensus will not be a big market event and shouldn't prompt large moves in currencies, said Carl Hammer, a currency strategist at SEB.
The BoJ comments should weigh on the yen and we're looking for dollar/yen to target 90.30 yen in the next couple of days.
The euro remained on the defensive as a short squeeze in the single currency appeared to have run its course, with investors fretting about debt-laden Greece and Moody's cutting Deutsche Bank's ratings.
Euro zone government bonds were little changed, with higher-yielding debt spreads over benchmark German Bunds holding steady after Greek successfully sold five billion euros worth of 10-year bonds on Thursday. But investors remained wary of a Greek sell off that could also spread to other issuers.
Ahead of a meeting between the two countries' leaders, Germany's economy minister said Berlin would not give Athens even one cent in financial aid.
Spot gold traded at $1,134.05 an ounce, up from New York's close. Volume was thin ahead of the U.S. payrolls data with key resistance seen at a January high of around $1,150.
Crude edged higher, capping two consecutive weeks of trading above $80, after China signaled it would maintain its economic stimulus, rekindling hopes for accelerating growth to drain excess oil supplies.
(Additional reporting by Ian Chua and Jessica Mortimer; editing by Patrick Graham)