By Michele Maatouk European stocks nudged a touch lower Friday ahead of key U.S. labor data, while gold prices tumbled as the hawkish tone of the latest Federal Open Market Committee minutes sparked a dollar rally. The minutes released late Thursday suggested that an early end to bond purchases may be on the cards. "The key takeaway from the minutes of the last FOMC meeting in mid December is that Fed officials might end quantitative easing sooner than the markets were expecting, triggering a rise in Treasury yields and the dollar," said Capital Economics. "Ultimately, it is the prevailing economic conditions that will determine when the Fed halts or slows the pace of its asset purchases. We suspect that another year of lackluster economic growth in 2013, coupled with only a modest improvement in the unemployment rate, will persuade the Fed to sustain QE into 2014," it added. Overall, moves in equity markets were muted, with investors likely wary of making any bold moves ahead of the nonfarm payrolls report--a release that has taken on even greater significance since last night's FOMC minutes. The decidedly less dovish tone of the minutes boosted the dollar across the board. The currency hit its highest level against the yen since the summer of 2010. The euro was also under the pressure against the greenback, as was the pound, which fell further after the U.K. December services PMI came in weaker than expected. "If our economists' call for today's employment report to deliver a better-than-expected payrolls figure of 190,000 versus consensus of 150,000 proves correct, focus could be directed towards a QE exit and towards the data thresholds announced by the Fed for policy rates to eventually be raised," said Danske. As a result, the dollar could strengthen further. "Having said that, the positive surprise in the ADP report yesterday suggests that it may take a number above 200,000 to rattle markets," added Danske. Meanwhile, in commodity markets, spot gold dropped to its lowest level in more than four months following the Fed minutes, while crude oil prices also slid as the greenback's rally diminished the comparative appeal of dollar-denominated resources. The Fed's easy money policies are considered to be supportive for bullion prices as gold is often sought as a hedge against liquidity-fuelled inflation and currency debasement. In bond markets, 10-year U.K. gilt yields briefly rose above their French counterparts for the first time since April 2011, despite the U.K.'s higher ratings, ahead of a heavy schedule of bond auctions. Late morning, U.S. futures pointed to a relatively flat open on Wall Street, where all eyes will be on the payrolls report at 1330 GMT. Latest Price Change From Previous Close FTSE 100 6042.56 -0.1% DAX 7736.17 -0.3% CAC-40 3699.66 -0.6% Stoxx Europe 600 286.09 -0.3% Hang Seng 23331.09 -0.3% Nikkei 225 10688.11 +2.8% Shanghai Composite 2276.99 +0.3% Dow Jones Industrials 13391.36 S&P 500 1459.37 DJIA Future 13312.00 -0.1% S&P 500 Future 1453.70 0.0% Level In Late New York Trading (Previous Session) EUR/USD 1.3018 1.3048 USD/JPY 88.22 87.25 GBP/USD 1.6044 1.6110 Change From Previous Close Mar. German Bund Future 142.88 -0.69 Feb. Nymex Crude Oil 91.87 -1.05 Feb. Brent Crude Oil 110.93 -1.21 Gold 1638.10 -36.50 --Tommy Stubbington and Laura Clarke contributed to this item Write to Michele Maatouk at michele.maatouk@dowjones.com

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