LONDON, Oct 24 - Stocks edged higher on Friday but investors remained nervous over corporate earnings and whether the recent rally in stocks could be derailed by expected higher interest rates. The dollar held its ground against the euro after gaining on Thursday on U.S. unemployment figures which firmed hopes that the recovery in world's largest economy is at last creating jobs. Bonds were mixed and sterling hit five year highs against the dollar after data showed a bigger than expected rise in retail sales in Britain in September. With the market nervous after a number of unimpressive third quarter earnings numbers from U.S. and European firms, stocks eked out meagre gains. "Having had two fairly active days, we're in for a bit of a quiet one today," said one London-based trader. "We've had big moves and lots of volatility but today I think people want to see confirmation that either it's finished moving (lower) or some sort of retracing before they get back involved." The FTSE Eurotop 300 index <.FTEU3> of pan-European blue chips was up 0.18 percent at 897 points while the narrower DJ Euro STOXX 50 <.STOXX50E> was up 0.17 percent to 2,493 points. The Eurotop 300 shed 2.3 percent in the previous two sessions as disappointment that companies have not been more bullish in their outlooks prompted investors to take money off the table after solid gains earlier this month. Asian stocks were broadly lower although Japanese markets stabilised after big falls the day before. The TOPIX <.TOPX> edged up 0.78 percent to end at 1,024.99, while the Nikkei average <.N225> ended flat at 10,335.70, after sinking 5.1 percent on Thursday, its biggest loss since the day after the September 11 attacks in the United States two years ago.
MSCI's broadest index of shares elsewhere in Asia <.MSCIAPJ> shed 0.4 percent -- with markets in Singapore and Malaysia closed for a public holiday -- after sliding about two percent on Thursday.
CURRENCY, BONDS
The dollar was slightly firmer on the day at $1.1775 per euro . The yen slipped back a touch to at 109.72 per dollar , after dipping almost to 110 in Asian trade. Traders said the pound rose to around $1.70 in early Asian trade on Friday, the first time it has been there since October 1998 and the third consecutive day of five year highs. Sterling was supported by prospects of an interest rate hike by the Bank of England (BOE) when its Monetary Policy Committee (MPC) meets next month. "Everyone was talking about global deflationary pressure until very recently, and this could mark some sort of a turning point for the global economy and currency markets," said Mitsuru Sahara, foreign exchange manager at UFJ Bank in Tokyo. British third-quarter gross domestic product (GDP) date released on Friday showed the economy grew by 0.6 percent in the third quarter. Retail sales were up 0.6 percent in September, firming expectations of an interest rate rise. With stocks inching up, bond yields were broadly flat. The interest rate sensitive two year Schatz yield flat was up 1.0 basis point at 2.664 percent with the benchmark 10-year Bund yield down 0.6 basis points at 4.291 percent. Crude oil futures traded 30 cents higher at $28.93 on Friday helped up by a refinery outage in the United States. Safe haven gold was unchanged at $384.20 to $385.00 a troy ounce from the New York close.//