LONDON – World shares were steady near two-week highs and the dollar at a seven-week high ahead of U.S. jobs data that will provide the last major signal on the state of the world's leading economy before its voters pick a president on Tuesday.
Expectations for a strong reading from U.S. non-farm payrolls due at 1230 GMT have been bolstered by a better-than-expected ADP private sector employment report and ISM manufacturing index reading on Thursday.
By mid-morning, the FTSEurofirst 300 index of top European shares <.FTEU3> was up 0.2 percent at 1111.90, its highest since October 22, helping keep the MSCI index of world shares steady <.MIWD00000PUS> at 332.0.
"The ADP figures were quite good," said Peter Garnry, equity strategist at Saxo Bank. "If the non-farm payrolls are better than expected, I think it could be a catalyst for the market to continue the momentum from yesterday going into the weekend."
Weak manufacturing data from Germany, France, Spain and Italy underscored the euro zone's troubles, however, and helped drive the euro to a three-week low against the dollar, which was at its strongest level for seven weeks.
Euro zone manufacturing has now contracted for 15 months running.
"All in all, the picture for the euro area economy remains extremely sluggish," said Newedge Strategy economist Annalisa Piazza, said of the data.
German Bund futures rose, testing the top of their recent range, but many investors shied away from taking large positions before the U.S. jobs data and with Greece again facing crisis.
Greece's deepening recession has put public finances under increasing strain and international lenders are struggling to reach an agreement with Athens over how to provide more urgently needed bailout cash.
A parliamentary vote next week on 13.5 billion euros of contested austerity measures is key to negotiations, with the outcome increasingly uncertain.
The payrolls data is expected to show U.S. employers added 125,000 jobs in October, pushing the jobless rate up to 7.9 percent from September's 7.8 percent.
With polls ahead of the November 6 election showing President Barack Obama neck-and-neck with Republican challenger Mitt Romney, news on the economy, good or bad, could be decisive.
"The unemployment rate has become extra interesting this time because of the impact it could have on the U.S. election," said Rabobank economist Philip Marey.
"Obama benefited from the drop last time, but if it rebounds back to 7.9 he will have to do some explaining, and it will give Romney some firepower going in to the final run-in."
U.S. stock index futures pointed to a slightly lower open on Wall Street, with futures for the S&P 500 and Dow Jones indexes both down by 0.1 percent, while Nasdaq 100 futures were flat.
Gold was heading for its fourth straight week of losses as it edged down towards $1,700 an ounce. Brent crude oil fell 31 cents to $107.86, with Europe's problems supporting the view that demand for fuel in developed economies will remain subdued.
"If the nonfarm payrolls data are very good, it will be bearish for gold, as it will cut expectations for any additional quantitative easing," said Nick Trevethan, a senior commodity strategist at ANZ in Singapore.
In Asia, recent data showing a pick-up in Chinese factory activity gave Hong Kong and Shanghai stock markets their best week in over a month, while the risk-sensitive Australian dollar rose to a five-week high of $1.0420.
"Downside risks are lessening," said Toru Yamamoto, chief strategist at Daiwa Securities.
(Additional reporting by Toni Vorobyova; Editing by Will Waterman)