UPDATE: Asian Shares Mostly Down;Cautious Before US Payrolls

SINGAPORE -- Asian stock markets were mostly lower Friday, as traders turned cautious ahead of a key U.S. jobs report. Miners were weighing on the Australian market on weaker base metal prices.

Investors had a negative cue from Wall Street's performance on Thursday, with the Dow Jones Industrial Average slipping 0.3%. That, coupled with uncertainty ahead of U.S. non-farm payrolls data later in the global day, prompted some light profit-taking.

"The (U.S. payrolls) data is one of key indicators that will help investors gauge the pace of the recovery of the U.S. consumer spending. So they want to see if the data quells the recent enthusiasm or helps extend the recent rallies," said Lee Kyoung-min at Woori Investment & Securities in Seoul.

Economists surveyed by Dow Jones Newswires on average expect July non-farm payrolls to have dropped by 275,000 jobs, from a loss of 467,000 jobs in the previous month.

Japan's Nikkei 225 was down 1.1%, Australia's S&P/ASX 200 was down 0.9% and South Korea's Kospi Composite was down 0.1%.

Hong Kong's Hang Seng Index was 1.7% lower with the Shanghai Composite down 1.2% and Singapore's Straits Times Index down 1.3%. U.S. stock futures were mildly lower in screen trade.

In Tokyo, auto stocks were lower on profit-taking after leading the Nikkei higher on Thursday. "The smart move is to take profits now," because carrying positions over the weekend and before U.S. payrolls data is too risky, said Yukio Takahashi, market analyst at Mizuho Securities. "Players won't make any big moves until they see how Wall Street reacts to the unemployment figures," he added.

Toyota was down 2.9%, Honda was down 2.6% while Sumitomo Metal Mining had lost 1.6%.

Australian miners Rio Tinto and BHP Billiton were down 2.1% and 2.4% respectively, while Alumina was 1.7% lower after the rally in base metals prices came to an abrupt halt Thursday, on doubts about the global economic recovery as well as profit-taking and U.S. dollar strength.

LME three-month copper was down $55 from Thursday's afternoon kerb at $5,970 per metric ton, extending its $174 loss on Thursday. Three-month nickel was at $19,200 per ton, down $400, and aluminum was down $24 at $1,966 per ton.

China shares continued to be weighed by worries of further policy tightening from the central bank. Also, "August is a busy earnings season, and investors are concerned many companies didn't perform well in the first half," said Jacky Zhang at Capital Securities.

Wuhan Iron & Steel was down 3.2%, Sinopec lost 3.1% and China Vanke fell down 2.3%.

Korea's Kospi Composite was bolstered by gains in financial and construction stocks, though many investors were sidelined ahead of the U.S. jobs data. KB Financial gained 0.7%, Hyundai Engineering was up 0.5% while Ssangyong Motor was up by its daily limit of 15% after its management and unions reached an agreement on job cuts Thursday, ending a 77-day strike.

In Hong Kong, Tsingtao Brewery jumped 0.7% after the beer maker reported a 68% on-year jump in its first half net profit.

Heavyweights China Mobile and Cnooc extended their recent gains on expectations of a listing on the mainland, adding 2.4% and 0.4% respectively.

Singapore blue-chip DBS fell 2.0% despite the bank's better-than-expected second quarter results as sentiment was dampened by concerns over rising bad debt charges.

Malaysian shares rose 0.1% with Philippine shares down 1.8% and Indonesian shares 0.1% lower. New Zealand's NZX-50 was up 0.1%.

Taiwan's financial markets were closed due to Typhoon Morakot, the first major typhoon of the season.

In foreign exchange markets, the major currencies were treading water, with all eyes on the U.S. non-farm payrolls data due later.

The euro was a tad higher against the greenback at $1.4355 from $1.4350 in late New York Thursday, but lower against the Japanese yen at Y136.80 from Y136.91, tracking weak Japanese stocks. The dollar was at Y95.27 from Y95.44.

Societe Generale's Yuji Saito in Tokyo said that with the start of the Japanese O-bon summer holiday next week, "market participants will probably be unwilling to make big bets."

The Australian dollar picked up on the Reserve Bank of Australia's policy statement but quickly pulled back. It was last at US$0.8376, from US$0.8430 right after the statement.

The RBA said that the current accommodative policy was appropriate but "a more normal setting of monetary policy could be expected at some point if further signs of a durable recovery emerge."

It revised its GDP forecast up, and now expected 0.5% growth in the fourth quarter from the year earlier. It had previously forecast a 1% contraction.

Asian currencies were mostly weaker against the greenback but export settlements offered some support for the Korean won and the Thai baht. The dollar was slightly higher at KRW1,226.3 from Thursday's close of KRW1,222.5.

Japanese government bonds were getting a lift from the weaker stock market with the lead JGB futures contract up 0.06 at 137.61 points in light trade.

Spot gold was $2.05 cents lower from late New York trade at $960.10 per troy ounce. The lead September Nymex crude futures contract was off 33 cents at $71.61 per barrel.