LONDON (Reuters) - A rally in global share markets paused on Friday as investors braced for monthly jobs data from the United States, while the euro recovered slightly from losses driven by the European Central Bank's decision to cut rates.
Analysts expect the April nonfarm payrolls report, due at 1230 GMT, to show American employers hired 145,000 people last month, up from March's dismal pace of 88,000 but not enough to erase fears the world's biggest economy is losing steam.
"I think we will see a weak payrolls number, but we'll have to wait and see whether markets take that as good news or focus on the fact that the economy is really weakening," said Fred Goodwin, cross-asset strategist at State Street.
The jobs data caps a big week for markets, following the U.S. Federal Reserve's decision on Wednesday to stick with its aggressive monetary policy easing, and Thursday's move by the ECB to cut rates and to signal a further easing may be ahead.
By increasing liquidity, the central banks have fuelled a rally in world share and bond markets, though the actions come in response to signs the global economic recovery is faltering.
MSCI's world equity index was steady around its best levels since June 2008 on Friday, while Europe's broad FTSEurofirst 300 index of leading shares was flat in early trade.
London's FTSE 100 was also flat, but Paris's CAC-40 and Frankfurt's DAX inched up 0.1 percent.
The euro was up 0.2 percent at about $1.31, having seen a broad sell-off on Thursday when the ECB indicated it was willing to consider further rate cuts and even charging banks for holding their money, known as negative interest rates.
The single currency's recovery was helped on Friday when ECB policymaker Ewald Nowotny said the markets may have over-interpreted the comments about possible negative interest rates.
Most euro zone bond yields were easier following the ECB announcement as investors were drawn to bonds offering higher returns than German debt.
French, Austrian and Belgian 10-year yields fell to new record lows of 1.65 percent, 1.436 percent and 1.905 percent, respectively, while Spain's fell below 4 percent for the first time since October 2010.
The premium demanded by investors to hold 10-year Italian bonds compared with German bonds narrowed to its tightest since July 2011 at 251 basis points. (Editing by Will Waterman; To read Reuters Global Investing Blog click on http://blogs.reuters.com/globalinvesting; for the MacroScope Blog click on http://blogs.reuters.com/macroscope; for Hedge Fund Blog Hub click on http://blogs.reuters.com/hedgehub)