* US economy indicators have been generally improving
* Improving US outlook give euro bears reason to pounce
* Technology stocks take off in Asia
* Will peripheral Europe bond yield spreads narrow further?
(Updates prices, adds European stocks)
By Kevin Plumberg
HONG KONG, Dec 3 (Reuters) - The dollar steadied on Friday
and stocks edged higher ahead of payroll data that could show
more evidence of a strengthening U.S. recovery and give
investors a reason to push more money into riskier assets.
The FTSEurofirst 300 index of leading European companies
rose 0.1 percent in early trade, echoing a slightly
firmer tone in Asia, but U.S. stock index futures <SPc1>
slipped 0.2 percent.
The euro was largely unchanged against the dollar
after two days of gains, supported overnight by talk that the
European Central Bank of was buying bonds of peripheral
countries such as Ireland and Portugal.
With the euro holding at $1.3225 above its 200-day moving
average despite the euro zone fiscal crisis, investors ahead
of the U.S. payrolls report put cash to work in stock markets,
lifting Japan's Nikkei share average briefly to a 6-month
intraday high and propelling technology shares.
"We expect the Bureau of Labor Statistics' (BLS) to report
that the employment situation improved further last month.
Indeed, the largest Census-adjusted job gain since April,
along with a dip in the jobless rate, should buoy consumers'
spirits and purchases during the holiday shopping season,"
Brian Jones, senior economist with Societe Generale in New
York, said in a note.
The Nikkei closed 0.1 percent higher , driven
mainly by buying of technology stocks such as Canon Inc, which
rose 1.5 percent .
Around the region, tech-related shares rallied, partly on
expectations for strong U.S. holiday sales. The Thomson
Reuters same-store sales index, based on 27 retailers
reporting, showed an increase of 6 percent for November, the
biggest increase since September 2006.
Shares of Taiwan Semiconductor Manufacturing Co Ltd
popped 3.2 percent to a 2-1/2-year high on trading
volume that was 3 times its 30-day average.
For a second day, the technology sector also outperformed
in the MSCI index of Asia Pacific stocks outside Japan
. The MSCI index was up 0.5 percent, while the
information technology index climbed 1.9 percent.
The broad index extended a 3.5 percent gain in the week,
exceeding the weekly returns of Japanese stocks for the first
time in three weeks.
MACRO OUTLOOK
The U.S. economy is forecast to have generated 140,000 new
jobs in November, with signs of a sustained recovery in
private sector hiring combined with solid auto sales and
continued industrial growth boding well for the macro outlook.
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The improving U.S. economic picture has been a factor
lifting the entire U.S. government bond yield curve higher.
The benchmark 10-year U.S. Treasury yield
edged down to 3 percent compared with a four-month high of
3.03 percent reached on Thursday. Since Monday, the yield has
risen 16 basis points, half of the entire rise since November.
Though the U.S. labour market report will be centre stage
on Friday, investors will also been watching for
follow-through on Thursday's unexpected narrowing in the
spread of higher risk European government bond yields over
German bond yields.
"Many investors outside Europe, including Asian investors,
may still want to reduce euro zone government debt holdings,"
said another trader at a Japanese bank
Market chatter about the European Central Bank stepping
into the market to buy bonds in tranches of as much as 100
million euros of at-risk countries such Ireland and Portugal,
as reported by the Financial Times, caused the Ireland/Germany
10-year yield spread to narrow to 590 basis points, the least
in two weeks.
The Portugal/Germany 10-year yield spread was at 352 basis
points, the narrowest since Oct 28.
(Editing by Kim Coghill)
