* Stocks add slightly to two-week closing high
* Euro approaching key technical level
* Bunds slightly lower; ECB buying bonds again -traders
* U.S. stock futures signal slightly higher Wall Street open
* U.S. non-farm payrolls in focus, due 1330 GMT
By Simon Jessop
LONDON, Dec 3 (Reuters) - European shares and the euro
gained on Friday, helped by talk the European Central Bank was
back in the market for peripheral euro zone bonds, with Wall
Street also seen higher ahead of fresh U.S. jobs data.
Both asset classes had opened steady ahead of the
much-watched payrolls data, seeking further evidence about the
scale of any ECB purchases, talk of which had also supported
markets in the previous session.
Peripheral euro zone debt outperformed as the purchases
reassured investors the bank would continue to support markets
despite the lack of any sign from President Jean-Claude Trichet
it would ramp up the programme. []
"The ECB really are the only buyer out there and there's
certainly some people looking to get out on the client side," a
trader said. []
A generally improved economic picture, supporting stock
markets and riskier assets, has been marred by the euro zone's
fiscal crisis.
Around midday, the cost of insuring Portuguese and other
peripheral debt remained lower, helped by fresh ECB buying of
Portugal and Ireland bonds, traders said, although its purchases
were in small sizes only.
Portugal's five-year credit default swaps tightened further
by midday to 409 basis points from 448 basis points, data from
Markit showed, while the premium paid for 10-year Portuguese
debt <PT10YT=TWEB> over benchmark German bunds <DE10YT=TWEB>
edged lower.
Elsewhere in the periphery, Ireland's yield spread over
bunds <IE10YT=TWEB> tightened slightly to 583 basis points.
After previously rallying on talk of the ECB bond buying, in
the hope it would help shore up confidence in the euro zone
periphery, the single currency was steady in early trade on
Friday, hovering around a key technical resistance level.
The euro <EUR=> traded at $1.3253 at 1151 GMT, above a 2-1/2
month low hit on Tuesday and just below its 100-day moving
average. It was below key resistance at $1.3334-64, its August
peak and a 38.2 percent retracement of the June-November rally.
"I suspect the euro has bottomed out in the near term and
will test $1.33-34," said a trader at a Japanese brokerage.
Among other currencies, the dollar <.DXY> traded down 0.4
percent against a basket of other currencies.
STOCKS RISE
The benchmark FTSEurofirst 300 <> share index had
fallen back slightly by midday, but remained positive -- up 0.1
percent -- after closing the last session at a two-week high.
All eyes were on the U.S. jobs data, said Justin Urquhart
Stewart, London-based director at Seven Investment Management.
"There's a positive tone to the market, despite all the
negative news on sovereign debt ... If the payrolls are
positive, it could easily push the market even higher," he said.
A strong overnight showing in U.S. stock markets had slowed
by the close of play in Asia, with gains of just 0.1 percent in
the Nikkei <>, mostly on buying in technology shares.
The MSCI world equity index <.MIWD00000PUS> is also higher,
up 0.3 percent, while U.S. stock futures <SPc1> are pointing to
a slightly higher open on Wall Street.
Oil <CLc1> was steady near 25-month highs following a recent
slew of upbeat U.S. economic data that bodes well for demand
from the world's top user, and ahead of the jobs report which is
expected to show employment expanded for a second straight month
in November. []
Non-farm payrolls are forecast to have risen 140,000, with
private hiring increasing by more than 100,000 for a fifth
consecutive month, according to a Reuters survey.
The unemployment rate is forecast to have held steady at 9.6
percent. []
Such a positive reading would add further weight to the
notion the country's recovery is picking up pace, and follows
data showing the number of jobless benefits claimants hit a
two-year low last week.
The PMI survey of business purchasing managers showed the
euro zone's service sector economy pulled ahead in November
thanks to strengthening German and French business, although
debt-burdened Ireland and Spain continued to lag behind.
[]
(Reporting by Simon Jessop; editing by Catherine Evans)
