Stock index futures were little changed on Friday ahead of a key monthly employment report expected to show the economy stopped shedding jobs last month for the first time in two years.

Economists in a Reuters survey forecast that U.S. nonfarm payrolls were flat in December after dropping by 11,000 in November, while the unemployment rate edged up to 10.1 percent from 10 percent in November. The report is due at 8:30 a.m. EST.

We expect a better-than-expected (nonfarm payrolls) number to continue to move up the market, but there is also a possibility of the market going down if the numbers are too good, thinking that the Fed is going to move ahead tightening their policy earlier than anticipated. This is the paradox that we are in now, said Arthur Hogan, chief market analyst at Jefferies & Co in New York.

S&P 500 futures fell 0.2 points and were in line with fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average futures dipped 4 points, and Nasdaq 100 futures gained 1.5 points.

James Bullard, president of the St. Louis Federal Reserve Bank, said Friday it would be good to see more improvement in the U.S. job market before exiting some stimulus programs.

Bank of America Corp will pay bonuses to its investment bankers that are close to 2007 levels, as it tries to stem defections following the takeover of Merrill Lynch, the Wall Street Journal reported.

Citigroup lowered fourth-quarter earnings views on Goldman Sachs Group Inc , Morgan Stanley and JPMorgan Chase & Co , and expects the three companies to report lower revenues from their fixed income, currency and commodities segments.

Goldman Sachs was sued by an Illinois pension fund seeking to recover billions of dollars in bonuses and other compensation being awarded for 2009, saying shareholders were harmed.

Exxon Mobil Corp is looking to sign a contract for a Transocean Ltd rig capable of drilling in Arctic waters that will cost up to $1 billion to build, according to a source.

Technology shares will be in focus after Taiwan Semiconductor Manufacturing Co Ltd <2330.TW>, the world's largest contract chipmaker, said December sales more than doubled from a year earlier, boding well for 2010 as new computers and other high-tech gadgets boost demand.

Intel Corp released a flurry of new computer chips Thursday in hopes of maintaining its dominance over rival Advanced Micro Devices Inc and in anticipation of increased demand.

Japan's Nikkei stock average rose 1 percent to hit a 15-month high on Friday, with chip-related shares climbing, while European stocks edged higher in morning trade, led by banking shares.

(Reporting by Angela Moon; editing by Jeffrey Benkoe)

Merrill Lynch Goldman sachs Investment Nikkei 225