Stocks on Thursday pulled back from a sharp rally the previous day, when markets reacted to a liquidity move by the world's major central banks, while the euro edged higher for a fourth day.
The move by the banks to offer cheap dollar loans for struggling European banks helped to soothe investor worries about a global financial crisis.
Their action also pushed the cost of interbank lending lower for the first time since July 22.
London interbank offered rates for three-month dollars fell to 0.52722 percent from 0.52889 percent. The last time the LIBOR rate fell, it was at 0.2521 percent.
Friday brings the U.S. monthly jobs report, the most widely watched U.S. economic indicator. After a series of stronger-than-expected economic reports, a less-than-stellar jobs report could disappoint some investors.
A report on Thursday showed the pace of growth in the U.S. manufacturing sector picked up in November to its strongest level since June.
At this point in time we are definitely building for a better payrolls number, said David Lutz, a trader at Stifel Nicolaus Capital Markets in Baltimore.
The U.S. economy is expected to have added 122,000 jobs in November.
On Wall Street, the Dow Jones industrial average <.DJI> ended down 25.65 points, or 0.21 percent, at 12,020.03. The Standard & Poor's 500 Index <.SPX> was down 2.38 points, or 0.19 percent, at 1,244.58. The Nasdaq Composite Index <.IXIC> gained 5.86 points, or 0.22 percent, at 2,626.20.
The MSCI world equity index <.MIWD00000PUS> was up 0.4 percent, well off the day's high, while European equities ended lower after a choppy trading session.
On Wednesday, the Dow registered its best day in point and percentage gains since March 2009.
According to a Reuters poll, U.S. stocks are expected to end next year with modest gains, but the range of predictions varies widely due to the uncertainty surrounding the euro zone debt crisis.
The S&P 500 is expected to rise about 7.5 percent from Wednesday's close to 1,340 by the end of next year, according to a median forecast from over 40 respondents polled over the last week.
EURO RISES BUT WORRIES REMAIN
The euro rose against the dollar, bolstered by generally successful Spanish and French debt auctions. The euro reached a high of $1.3521, according to Reuters data.
Overseas, Spain sold 3.75 billion euros of debt in three maturities at the top of the targeted range, although its cost of borrowing was the highest in 14 years and at levels seen as unsustainable for public finances. France also found demand for its sale of 4.35 billion euros of debt in several maturities.
Still, investors were said to be consolidating their positions ahead of the jobs report.
Headlines from Europe have caused much volatility in markets in recent months, with the region's debt crisis fuelling worries the problems could escalate into a global financial crisis.
Although investors cheered Wednesday's joint central bank action, they are worried that the debt crisis remains unresolved, with little time for politicians to find a solution.
MONEY MARKET STRAIN
Some gauges of money market strain stayed near end-2008 levels. A substantive solution to the debt crisis is needed before a return to more normal lending, analysts said.
The European Central Bank signalled on Thursday it stood ready to act more aggressively to fight Europe's debt crisis if leaders in the 17-nation euro zone agree next week on tighter budget controls. Euro zone leaders meet on December 9.
U.S. government debt prices fell. Benchmark 10-year Treasury notes traded 9/32 lower in price to yield 2.11 percent, up from 2.08 percent late Wednesday and from 1.89 percent just over a week ago. Yields reached just above 2.14 percent to the highest in a month.
In the oil market, Brent crude oil futures fell more than 1 percent.
Gold fell in light trade, snapping a three-day rally, as the bullion market took a breather after the previous session's sharp gains.
Gold prices were nearly flat after earlier rising to their highest in two weeks as the central banks' move gave investors confidence to cut their holdings of cash.
Gold fell 0.2 percent to $1,742.49 an ounce, having earlier touched a two-week high of $1,754.
(Reporting by Caroline Valetkevitch; Additional reporting by Ellen Freilich, Julie Haviv and Rodrigo Campos; Editing by Dan Grebler)