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RISK-OFF MOOD DENTS EUROPE AHEAD OF PAYROLLS (0818 GMT)
Europe's STOXX 600 is down for a second day, falling 0.3% in early trading, led by losses in utilities and media companies.
Sentiment is languishing after markets were roiled on Thursday by stronger-than-expected U.S. jobs data, sending stocks lower and 2-year Treasury yields to 16-year highs. A few hours remain on the clock before U.S. non-farm payrolls are due at 1230 GMT.
The FTSE 100 is underperforming the wider market, down 0.6% versus a 0.3% fall in Germany's DAX
Leading sector losses are media companies and utilities, both down 1.4%. On the media front, Dutch information services company Wolters Kluwer is down 2.6%.
Better off and rising are chemicals up 0.7%, and basic resources up 0.7%.
In the UK, shares in British lender OSB Group have dropped over 20% after a trading update. Shares in France's SES Imagotag are also in the spotlight, soaring by more than 40% after investors shrugged off a second report by short-seller Gotham City Research.
BATTERED BOND MARKET BRACES FOR PAYROLLS (0639 GMT)
Bond markets are in a world of pain, with yields catapulted to decade highs across developed markets.
The trigger is not immediately clear, selling having begun before private U.S. payrolls data landed on Thursday, but the momentum has stopped out those positioned for peak rates and has hit the longer end of the curve particularly hard.
Non-farm U.S. payrolls due at 1230 GMT will present another conundrum that's unlikely to end well for bonds. Is a strong figure good for risk, since it means recession is being avoided? Or is it bad news because it implies higher interest rates?
Dealers in Asia reckoned either is bad for bonds, which were under pressure around the region. Aussie ten-year yields joined gilt yields at decade highs.
Treasuries nursed losses from a two-day rout.
Asian stocks slid to five-week lows.
Adding to the dour mood in Asia was a selloff in Chinese banks, which have become the latest focal point for worry about the disappointing state of the world's second-biggest economy.
An editorial in China's state-backed Securities Times said on Friday that Goldman Sachs' downgrade of Chinese banking stocks was based on pessimistic assumptions that investors would be ill-advised to follow.
Yet, follow they have done, as Hong Kong's banking index slid toward a weekly loss of 10%, its worst showing in five years. The twin concerns - higher rates and slowing Chinese growth - seem to have finally put the brakes on stocks.
Key developments that could influence markets on Friday:
U.S. non-farm payrolls
(Tom Westbrook)
FUTURES SIGNAL TENTATIVE RISE AFTER PREVIOUS SESSION'S BATTERING (0635 GMT)
Eurpoean futures are pointing to modest rises of about 0.3% for bourses at the open, after Thursday's mauling which saw the STOXX 600 finish 2.3% lower, clocking its worst day since March's banking turmoil.
The battering came after sentiment - already flagging on Wednesday's hawkish Fed meeting minutes and jitters around low China growth - deteriorated further after red hot U.S. jobs data added fuel to the fire for more Fed rate hikes in 2023.
But it was bonds that stole the show; the U.S.two-year treasury yield surged to a 16-year high while in the UK the yield on 10-year gilts rose its most elevated since 2008.
And the drama might not be over yet. The countdown is on until U.S. non-farm payrolls are due at 1230 GMT.
Separately, U.S. Treasury Secretary Janet Yellen has kicked off a four-day visit to China focused on easing tensions between the world's two largest economies.
In company news, Shell, Europe's largest oil and gas company, said on Friday it expects second-quarter trading at its gas division to be "significantly lower" compared with the previous quarter.
Eyes will also be on shares in Bottler Coca-Cola HBC which has raised its 2023 profit expectation.
(Lucy Raitano)