From: Morrison Securities Pty. Ltd.

U.S. STOCK MARKETS

U.S. stocks fell Friday for a second straight day as worries about Europe overshadowed a drop in U.S. unemployment to its lowest level since February 2009, but the market finished the week with strong gains.

The Dow Jones Industrial Average fell 55.78 points, or 0.45%, to 12359.92, bringing its gains for the holiday-shortened week to 1.2%.

The Standard & Poor's 500-stock index finished down 3.25 points, or 0.25%, at 1277.81, while the Nasdaq Composite gained 4.36 points, or 0.16%, to 2674.22.

Telecommunications stocks were the biggest drag on the market, while gains among consumer-discretionary stocks offset some of those losses.

Microsoft and Walt Disney led the Dow gainers, rising 1.5% and 1%, respectively. The moves came on a day in which data showed U.S. nonfarm payrolls increased by 200,000 in December, according to the Labor Department, topping expectations for 155,000 new jobs.

The unemployment rate dropped to 8.5% from a revised 8.7% in November. That is the lowest reading in nearly three years. Skeptics found plenty to quibble with.

Some pointed to a holiday-season effect, with 42,000 of the job gains coming from messengers and couriers that many expect to be laid off after December.

Investors also were focused on developments overseas, particularly in Europe, where the Italian government's cost of borrowing money for 10 years remained above the 7% level deemed unsustainable over the long term. The 10-year yield closed at 7.175%.

EUROPEAN STOCK MARKETS

Economic data for the euro zone also showed unemployment rising for a seventh consecutive month, while November factory orders in Germany fell nearly 5%, erasing gains made the previous month.

Most European stock markets fell Friday, as Italy's 10-year government bond yield surged above 7%, rekindling fears about the euro-zone sovereign debt crisis and overshadowing better-than-expected U.S. jobs data. The pan-European Stoxx 600 index closed marginally higher, but many national benchmarks finished lower.

The Stoxx 600 gained 0.06% Friday to end at 247.53, bringing its weekly gains to 1.2%. Mitchells & Butlers PLC was one of the top gainers in the Stoxx 600, its shares rallying 8.7% after Morgan Stanley upgraded the restaurant operator to overweight from equal weight.

Debt worries once again soured sentiment across most of Europe Friday ahead of government bond sales for both Spain and Italy in the coming week.

The yield on 10-year Italian government bonds rose 16 basis points to 7.11% in late trade, even as the European Central Bank reportedly intervened in the secondary markets earlier to buy Spanish and Italian bonds. In Italy, the FTSE MIB stock index dropped 0.8% to 14,645.64, as shares of UniCredit SpA slumped 11.1%, bringing the bank's weekly decline to 38%.

In Germany, the DAX 30 index fell 0.6% to 6,057.92, as shares of Deutsche Bank AG dropped 3.5%. In France, the CAC 40 index slipped 0.2% to 3,137.36, with bank Societe Generale down 3.2%. Shares of Publicis Groupe SA climbed 3.5% after Morgan Stanley upgraded the advertising company to equal weight from underweight.

The U.K.'s FTSE 100 index gained 0.5% to 5,649.68, buoyed by gains for shares of Vodafone Group PLC, which climbed 1.2%. Goldman Sachs upgraded the mobile operator to buy from neutral, saying that it sees a potential total return of 55% over the next two years.

ASIA-PACIFIC STOCK MARKETS

Most Asian stocks declined Friday as fears that the European debt crisis was deepening outweighed positive U.S. economic indicators and hopes for strong U.S. jobs data later in the day. Japan's Nikkei Stock Average closed 1.2% lower at 8,390.35, Hong Kong's Hang Seng Index dropped 1.2% to 18,593.06, South Korea's Kospi dropped 1.1% to 1,843.14 and Taiwan's Taiex gave up 0.2% to 7,120.51.

The Shanghai Composite gained 0.7% to 2,163.40, staging a rebound from its 34-month closing low a day earlier. Mainland Chinese stocks advanced as energy producer PetroChina Co. jumped after Beijing raised a threshold for a so-called windfall tax, effectively reducing tax payments for oil producers.

Banks and resource stocks also climbed after hefty losses recently, although many property developers declined on Chinese bourses. PetroChina Co. shares climbed 1.6% and China Petroleum & Chemical Corp., or Sinopec, added 0.8% in Shanghai. Shares of China Construction Bank Corp. added 1.5% and Jiangxi Copper Co. rose 1.7%, while Poly Real Estate Group Co. shed 1.0%.

In Hong Kong, shares of PetroChina added 2.3% and Sinopec climbed 1.8%, while Cnooc advanced 3%. But those gains in Hong Kong were far outweighed by losses in financial and other shares amid worries over Europe. Shares of HSBC Holdings PLC fell 2%, while Ping An Insurance Group Co. lost 4.5% in Hong Kong. Financials also weakened elsewhere, with KB Financial Group Inc. losing 1.6% in Seoul and Chinatrust Financial Holding Co. falling 3.3% in Taipei.

Japanese exporters with large exposure to Europe were among the market casualties Friday, as the euro lost further ground against the Japanese yen overnight. Sony Corp. lost 2% and Advantest Corp. dropped 3.3%, while Nissan Motor Co. gave up 2.2%.

Base metals were mostly little changed at the close of London Metal Exchange trading Friday as stronger-than-expected U.S. payroll data not only failed to distract from issues in the euro zone but also escalated the euro's selloff. At the close, LME three-month copper was 0.5% higher at $7,580 a metric ton, having earlier dipped below $7,500/ton after the payroll data's release.

Lead fared the worst of the metals, closing 2.3% lower at $1,958.50/ton. Crude-oil futures fell Friday despite an improving U.S. jobs picture as traders focused on declines in equities markets and a stronger dollar.

Light, sweet crude oil for February delivery settled 25 cents, or 0.3%, lower at $101.56 a barrel on the New York Mercantile Exchange after trading as high as $102.80 earlier in the session. Brent crude oil on the ICE Futures exchange rose late in the session to trade 80 cents higher at $113.06 a barrel.

Gold futures slipped slightly as gains in the dollar and a strengthening U.S. labor market curbed demand for the precious metal as an alternative asset. The most actively traded gold contract, for February delivery, fell $3.30, or 0.2%, to settle at $1,616.80 a troy ounce on the Comex division of the New York Mercantile Exchange. On the week, futures rose 3.2%.