Investors took a breather in Asia on Friday after rallying through the week on optimism over the easing of lockdown measures, massive stimulus and signs that the worst of the global economic downturn may be over.

While tensions between China and the US continue to play in the background, the general mood at the start of June has been upbeat, helping Hong Kong climb around six percent, while crude was on course for another positive week as demand picks up.

But analysts said traders were shifting cautiously going into the weekend and ahead of the release of key US jobs data later in the day expected to show the highest unemployment rate in 90 years.

After a soft lead from Wall Street, where profit-taking kicked in, Asian markets fluctuated.

Tokyo's Nikkei ended the morning 0.4 percent lower, Sydney dropped 0.3 percent, and Shanghai and Hong Kong were both flat. There were also losses in Manila, Jakarta and Wellington.

Seoul edged up 0.6 percent, Singapore added 0.2 percent and Taipei rose 0.4 percent.

"We had stocks make a miraculous recovery from their March 23 lows and so it makes sense that we're unlikely to see the rally continue at the pace it has," Kristina Hooper at Invesco said.

"We're probably going to see more of a plateauing, more of trading in a range until there's a catalyst that moves them forward."

While buying was not as strong as earlier in the week, hopes remain high that the world economy is on the right track back following mind-boggling stimulus and central bank help, while countries from Asia to Europe to the US ease out of restrictions.

The latest support came from the European Central Bank, which on Thursday ramped up its emergency bond-buying scheme by a bigger-than-expected 600 billion euros ($674 billion) to 1.35 trillion.

Bank chief Christine Lagarde warned that the eurozone economy would contract 8.7 percent this year, but predicted a rebound over the next two.

The focus now turns to Washington, where the Commerce Department is forecast to reveal another 8.5 million jobs were lost in May, Sending the jobless rate to close to 20 percent or even higher.

Figures on Thursday showed 1.9 million more people applied for jobless claims last week, taking the total to more than 42 million because of the shutdowns.

"A gnarly (figure) is likely to herald the highest unemployment rate since the Great Depression," said AxiCorp's Stephen Innes.

Traders hopeful for quick global economic rebound
With life slowly getting back to some form of normal in major cities including Paris, traders are hopeful for a quick global economic rebound. Photo: AFP / ALAIN JOCARD

"It will be hard for the US employment report for May... to shock markets, given the nonplussed reaction to recent labour market data.

"Still, the sticker shock of near-20 percent unemployment suggests US equities may need a rapid recovery in the critical job metrics to justify these elevated levels, let alone for stock markets to punch higher."

Oil markets were slightly lower but on course for a sixth weekly rise as the reopening of economies boosts demand hopes, while major producers led by Russia and Saudi Arabia close in on an agreement to extend their huge output cuts.

And the dollar remained under pressure as investors buy into higher-yielding, riskier assets on reopening optimism, while the euro sat at its highest levels since March following the ECB's bonds bazooka.

Tokyo - Nikkei 225: DOWN 0.4 percent at 22,616.77 (break)

Hong Kong - Hang Seng: FLAT at 24,370.72

Shanghai - Composite: FLAT at 2,919.05

West Texas Intermediate: DOWN 0.4 percent at $37.27 per barrel

Brent North Sea crude: DOWN 0.2 percent at $39.91 per barrel

Euro/dollar: UP at $1.1332 from $1.1331 at 2050 GMT

Dollar/yen: DOWN at 109.09 yen from 109.16 yen

Pound/dollar: UP at $1.2590 from $1.2588

Euro/pound: UP at 90.00 pence from 89.99 yen

New York - Dow: UP 0.1 percent at 26,281.82 (close)

London - FTSE 100: DOWN 0.6 percent at 6,341.44 (close)

- Bloomberg News contributed to this -

Copyright AFP. All rights reserved.