BANGKOK - Asian stocks wilted Friday as the possibility of credit rating downgrades for major economies and bleak unemployment figures in the U.S. added to fears the recent massive rally was built on shifting sands. European shares were moderately higher. After piling into battered markets over the past two months, running up gains of 30 percent or more from Asia to the U.S., investors are increasingly hard pressed to justify hopes that a global economic recovery is around the corner. In overnight and Asian trade, markets were unnerved by a credit agency's warning about the British government's debt ratings. The threat of a downgrade could signal similar problems for the United States and other big economies staggering under a growing mountain of debt as they try to spend their way out of recession. An employment report from the world's biggest economy was equally dispiriting. Though the number of newly laid-off workers seeking unemployment benefits in the U.S. fell 12,000 to 631,000 last week, continuing claims rose to 6.7 million , hitting a new record for the 16th consecutive week in data that goes back to 1967. The unrelenting bad news and recent losses on Wall Street were leading many investors to reassess their expectations about the economy and the recent rally, analysts said. "It seems the markets are at a crossroads. What were seeing today is a lot of confusion," said Kirby Daley, senior strategist at Newedge Group in Hong Kong. "The markets here are trying to digest what is truly happening in the U.S. and trying to balance that with Asia." "There is no consensus view right now, and that's leaving investors confused," he said. As trading got underway in Europe, Britain's FTSE 100 was up 0.6 percent, France's CAC 40 rose 0.5 percent and Germany's DAX gained 0.3 percent. US. stock futures pointed to modest gains Friday on Wall Street. Dow futures were up 34 points, or 0.4 percent, to 8,329 and S&P futures gained 0.9, or 0.1 percent, to 889.60. In Tokyo, Japan's Nikkei 225 stock average gave up early gains to drop 38.84 points, or 0.4 percent, to 9,225.81, while Hong Kong's Hang Seng index was off 136.97, or 0.8 percent, at 17,062.52. Elsewhere, South Korea's Kospi slipped 1.3 percent and Australia's benchmark fell 1.4 percent. Among the few gainers, Taiwan rose 0.3 percent and Malaysia's index rose 0.8 percent. Stocks in Tokyo were also pressured by a strong yen, which hurts profits of the country's brand name exporters. The dollar was trading at 94.21 yen compared to 93.91 late Thursday in New York, while the euro edged up to $1.3937. Toyota Motor Corp., the world's No. 1 automaker, dropped 2.2 percent, Sony Corp. shed 2.0 percent and Japan's top chipmaker Toshiba Corp. fell 1.2 percent. The far-reaching consequences of the global recession were underlined Thursday by Standard & Poor's warning that Britain's "AAA" credit rating may be cut because of rising debt. That would raise the cost of borrowing for the British government, which is taking a big role in bailing out that country's stricken banks, and could mean similar warnings for other debt-laden governments. Analysts said the S&P warning shows there are limits to how much debt governments can take on even when it's part of efforts to revive staggering economies. And even after governments pumping hundreds of billions of dollars into economies around the world there are still questions about how soon a rebound might take hold. Those fears and weak data reined in Wall Street on Thursday. The Dow fell 129.91, or 1.5 percent, to 8,292.13, after earlier falling as much as 201 points. The Standard & Poor's 500 index fell 15.14, or 1.7 percent, to 888.33, and the Nasdaq composite index fell 32.59, or 1.9 percent, to 1,695.25. In oil, crude stayed above $61 a barrel in Asia. Benchmark crude for July delivery was up 32 cents to $61.37 a barrel midday in Singapore in electronic trading on the New York Mercantile Exchange.

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