World stock markets fell modestly today as investors braced themselves for the U.S. jobs report for December, which many fear could be one of the worst ever.

A weaker than anticipated private sector survey earlier this week stoked fears that the official jobs data due Friday will make for particularly grim reading.

Most analysts think the U.S. economy shed some 600,000 jobs during December, which would mean over 1 million have been lost in just two months. The unemployment rate is forecast to jump from 6.7 percent in November to 7 percent in December, which would be the highest in over 15 years.

Equity markets, which enjoyed a rally at the end of 2008 on hopes that fiscal and monetary stimulus measures would help the global economy recover later this year, have been on the retreat in the last few days. Fears are mounting about the scale of the recession, particularly in the U.S., where a raft of retailers reported dismal sales figures for December.

Neil Mackinnon, chief economist at ECU Group, said the reaction to the jobs data will be key to see if the market rally can resume or whether the recent uptrend was just a bear market rally.

"If it's a bad report and equities finish on a positive tone, that will be a very encouraging sign for markets, but if it's really bad and equity markets slump, it will be challenging for markets for the rest of the quarter," he said.

Given the apprehension ahead of the data, markets were relatively subdued.

In Europe, the FTSE 100 index of leading British shares was down 13.74 points, or 0.3 percent, at 4,491.63, while Germany's DAX fell 14.74 points, or 0.3 percent, to 4,865.17. France's CAC-40 was 7.49 points, or 0.2 percent, at 3,316.84.

Earlier in Asia, Tokyo's Nikkei 225 stock average fluctuated through the session, eventually ending 39.62 points lower, or 0.5 percent, at 8,836.80 by the close. Hong Kong's Hang Seng Index lost 38.47 points, or 0.3 percent, to 14,377.44, after rising earlier in the session amid what analysts said was speculation about central government aid for the power sector.

In South Korea, the Kospi shed 2.1 percent even as the country's central bank cut its key interest rate for the fifth time in three months to help shore up the country's sagging economy. Benchmarks in India, Taiwan and Singapore sank, bit those in Shanghai and Australia advanced.

On Thursday, Wall Street closed mixed after lawmakers and Citigroup worked out a deal that could support the battered housing sector by limiting the number of mortgage foreclosures. Sentiment was hurt after Wal-Mart Stores Inc. issued a profit warning and reported dismal sales for December, heightening fears that consumers are faring even worse than thought.

The Dow ended 27.24, or 0.31 percent, lower at 8,742.46 after being down as much as 119, but broader stock indicators climbed. The Standard & Poor's 500 index rose 3.08, or 0.34 percent.

U.S. futures pointed to losses on Wall Street, though markets open after the jobs data are released. Dow futures were down 27 points, or 0.3 percent, at 8,669, while S&P 500 futures fell 2.5 points, or 0.3 percent, to 904.20.

Oil prices fell moderately, with light, sweet crude for February delivery down 59 cents to $41.11 a barrel in electronic trading on the New York Mercantile Exchange. The contract overnight fell 93 cents to settle at $41.70.

In currencies, the dollar slipped 0.4 percent to 90.68 yen while the euro was steady at $1.3704.