Doubts over US growth cool dollar rally

Investors await key jobs data due on Friday

The US dollar lost ground on Thursday, the last trading day of the week for many markets ahead of Easter, after disappointing economic data on Wednesday raised doubts over the growth outlook ahead of key jobs data due Friday.

Although non-farm payrolls are expected to show an increase of 245,000 jobs in March, according to economists polled by Reuters, Wednesday's data hit US equities and reinforced concerns that the dollar's recent rally has weighed on exports.

Thursday's pullback in the US dollar index, which is still up some 8% year-to-date, gave a boost to emerging-market stocks -- trading at a one-month high -- as main emerging currencies strengthened against the dollar.

The mood was more muted in Europe, where the pan-European FTSEurofirst 300 equity index slipped 0.1% and eurozone bond yields traded flat to higher. Shares of British retailer Marks & Spencer outperformed after posting its best non-food sales performance for nearly four years.

"People are reluctant to chase the market higher today because of the US payrolls coming tomorrow when Europe will be closed," FXCM market analyst Vincent Ganne said.

"Following (Wednesday's) figures, there are some worries that the payrolls could be soft."

Most US markets will be closed on Friday, with some European markets closed Friday through Monday and reopening on Tuesday. Indian markets were closed on Thursday.

Asia shrugged off the US doubts, with MSCI's broadest index of Asia-Pacific shares outside Japan up 0.8%.

Australian shares finished up 0.7%, on growing expectations that the Reserve Bank of Australia will announce its second rate cut of 2015 when it meets on Tuesday, the first trading day after markets close for the Easter long weekend.

Japan's Nikkei stock average ended 1.5% higher, after skidding to a three-week low in the previous session.

US crude oil and Brent crude futures were down about 24 cents per barrel, to $49.85 and $56.85 respectively, as the prospect that any deal in nuclear talks with Tehran and a possible increase in its crude exports helped to keep pressure on prices.

Gold hovered above $1,200 an ounce, clinging to gains from the prior session when it rose the most in two months, while London nickel climbed nearly 2% on technical buying, sparked after traders brought more into China following a steep price drop earlier in the week.