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Solid US jobs data weigh on markets

Pan Pylas, AP Business Writer

A man walks in front of a securities firm in Tokyo, Friday, Nov. 8, 2013. Asian stocks tracked losses in the U.S. on renewed concern the Federal Reserve will start scaling back stimulus earlier than expected after a report showed that the U.S. economy grew faster than predicted. (AP Photo/Junji Kurokawa)

LONDON (AP) -- Another largely solid U.S. jobs report kept a lid on markets Friday by keeping investors on alert for a possible reduction in the Federal Reserve's monetary stimulus.

Government figures showed that the U.S. generated 204,000 jobs in October, way ahead of market expectations for a more modest increase of 125,000. September's figure was also revised up to show a 163,000 rise.

The reaction in stock markets, however, was relatively muted, especially as the unemployment rate, which is based on a separate survey, rose to 7.3 percent from 7.2 percent.

In addition, investors had already been expecting the Fed to begin 'tapering' its stimulus earlier than expected after figures on Thursday showed the U.S. economy grew faster than expected in the third quarter. The S&P had its worse day since late August following the growth figures as investors believed they would make the Fed more willing to reduce its $85 billion of asset purchases, possibly starting in December.

Many analysts also wonder how accurate the October figures are since the U.S. government was partially shut down during much of the month.

"Given the impact of the shutdown, we have to wait until November's report to get a fuller picture of what's happening this fall," said Dan Greenhaus, chief global strategist at BTIG.

In Europe, the FTSE 100 index of leading British shares was down 0.4 percent at 6,671 while Germany's DAX fell 0.5 percent to 9,032. French shares underperformed in the wake of a downgrade of the country's debt by Standard & Poor's — the CAC-40 was down 1.1 percent at 4,235.

In the U.S., the Dow Jones industrial average was up 0.1 percent at 15,604 while the broader S&P 500 index rose the same rate to 1,750.

The dollar was slightly stronger following the payrolls data, 0.6 percent higher at 98.81 yen, while the euro was down 0.4 percent at $1.3357.

On Thursday, the euro took a big knock after the European Central Bank cut its main interest rate to a record low of 0.25 percent, a move that surprised many, but not all, in the markets.

Earlier in Asia, Japan's Nikkei 225 sank 1 percent to end at 14,086.80 and Seoul's Kospi dropped 1 percent to 1,984.87. Hong Kong's Hang Seng slid 0.6 percent to 22,744.39. In mainland China, the Shanghai Composite fell 1.1 percent to 2,106.13.

Investors in Asia are also hanging back ahead of a weekend meeting in Beijing where China's communist leaders are expected to lay out their long-term plan for the world's No. 2 economy. A report that showed strong growth in Chinese exports last month was not enough to counter investor caution.