SYDNEY - Asian shares spent much of Friday in a state of suspended animation as tension mounted ahead of jobs data that could make or break the case for an imminent scaling back in US stimulus.
The cautious mood looked set to grip European bourses as well with financial spreadbetters expecting an underwhelming start for Germany's DAX .GDAXI, France's CAC .FCHI and Britain's FTSE .FTSE.
Government borrowing costs from Japan to Australia hit fresh highs on trepidation the Federal Reserve could start tapering its $85 billion of monthly debt purchases at its policy meeting on December 17 and 18.
"It's still 50/50 as to whether they move in December or wait to see a bit more certainty that recent strength will be sustained," said Shane Oliver, head of investment strategy and chief economist at AMP Capital.
While all the uncertainty was a drag for now, he was optimistic longer term. "Tapering will only occur because the Fed is more confident the US recovery is sustainable," argued Oliver. "In other words, mission accomplished."
"And the Fed will likely couple the start to tapering with a move to further push out expectations for the first rate hike."
For the moment, though, discretion was coming out ahead of valour and share markets across Asia were mixed at best.
Japan's Nikkei .N225 at least managed to steady after steep falls the previous two days. It closed up 0.8 per cent on Friday, outperforming the rest of Asia.
Dealers said offshore investors remained buyers of exchange-traded funds and index heavyweights in the firm belief the Nikkei is on a sustained uptrend given the determination of the Bank of Japan to beat deflation.
MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS was flat, while Shanghai stocks slipped 0.5 per cent .SSEC as China set its yuan at a record high, continuing the slow appreciation of the currency.
The lead from Wall Street was again less than helpful with the Dow Jones .DJI and the S&P 500 .SPX both ending down 0.43 per cent. That marked a fifth straight day of losses as investors fretted about the risk of Fed tapering.
Crucial to that decision could be the payrolls report for November due later Friday. The median forecast is for an increase of 180,000 in payrolls with the jobless rate steady at 7.2 per cent.
The market would tend to see anything over 200,000 as greatly adding to the chance of a tapering this month, while a result under 150,000 would diminish the risk.
It is worth remembering that total US employment is over 136 million so the difference in a monthly rise in jobs of 150,000 or 200,000 is statistically insignificant, yet it has the power to move markets massively.