By Shinichi Saoshiro
TOKYO (Reuters) - Asian stocks rose on Friday on upbeat expectations for the closely-watched U.S. jobs data, while the euro continued to flirt with fresh nine-year lows against the dollar.
But spreadbetters expected the rebound in equities to peter out in Europe ahead of the U.S. employment data, forecasting Britain's FTSE and Germany's DAX to open little changed and France's CAC to start a shade lower.
Equities worldwide suffered deep losses early this week as plunging oil prices and global growth woes triggered investor flight from risk assets. But optimism about the U.S. economy and prospects of more stimulus from the European Central Bank and China have diffused risk aversion for the time being.
MSCI's broadest index of Asia-Pacific shares outside Japan rose 1.2 percent.
Australian shares added 1.6 percent, while the Shanghai Composite Index gained 2 percent and Hong Kong's Hang Seng index advanced 1.2 percent. Japan's Nikkei was up 0.1 percent after giving back earlier gains.
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The S&P 500 has risen a total of 3 percent over the last two sessions, retracing most of its 4.2 percent loss in the previous five trading days.
Friday's U.S. jobs report is expected to show that non-farm payrolls increased by 240,000 in December. That would mark the 11th consecutive month of job gains above 200,000, the longest stretch since 1994.
"With worries over the Chinese economy slowing down and risks from Greece still in place, further evidence of continuing recovery in the U.S. economy will be needed if risk appetite is to recover fully," said Junichi Ishikawa, market analyst at IG Securities in Tokyo.
A strong non-farm reading would strengthen prospects of the Federal Reserve hiking rates later this year and again highlight the contrast in policies between the ECB, now facing euro zone deflation and seen on the brink of adopting quantitative easing.
The grip of falling prices was evident in China as well. Data on Friday showed inflation in the world's second largest economy hovered close to a five-year low, giving policymakers more room to ease policy and support growth. China's stock markets were the top performers in the world last year on expectations of further stimulus measures.
"Deflation this year is definitely a risk," said Minggao Shen, economist at Citi in Hong Kong.
"We continue to argue that deflation provides more room for policy easing. Our best-case scenario is still two more rate cuts in the first half of this year and maybe three to four reserve requirement ratio cuts this year."
In currencies, the euro traded at $1.1806, wallowing close to a fresh nine-year low of $1.1754 hit overnight on the back of enhanced expectations that the ECB would embark on fresh easing as early as this month.
The dollar traded at 119.230 yen, having come back from a three-week low of 118.05 struck on Tuesday when risk aversion favoured the safe-haven Japanese currency.
Providing another source of relief for still wary global markets, crude oil prices held their ground after a 10 percent loss earlier in the week. [O/R]
U.S. crude oil gained 37 cents to $49.16 a barrel after plumbing a 5-1/2-year low of $46.83 on Wednesday.
Tanking prices have started taking a toll on the once booming U.S. shale oil and gas producers.
WBH Energy, a small Texas producer, filed for bankruptcy protection this week, becoming what may be the first, and unlikely the last, American company of its kind to do so since crude prices started sliding six months ago.
(Additional reporting by Judy Hua and Kevin Yao in Beijing; Editing by Jacqueline Wong & Kim Coghill)