Asian stocks recovered on Friday after three days of declines but investors remained nervous ahead of a closely-followed U S. job report amid concerns over the U.S. and global outlook.

World stocks closed out a dismal second quarter and the 10-year U.S. Treasury yield has fallen below 3 percent as European debt woes and growing fears of a double-dip recession on the back of grim economic data rolled financial markets.

The U.S. economy doesn't look so good. Wall Street is choppy and it's hard to predict trends, but it's starting to look a bit like a bear market, said Koichi Ogawa, chief portfolio manager at Daiwa SB Investments.

There was some aggressive selling yesterday from foreign investors, but this appears to have ebbed today. Still, if the Nikkei breaks below 9,000 things will start to look very bad.

Japan's Nikkei average <.N225> rose 0.5 percent in choppy trade with market players saying a rise in the euro prompted short-covering in blue-chip shares that fell to multi-month lows on Thursday.

The MSCI index of Asia Pacific stocks outside Japan <.MIAPJ0000US> was 0.6 percent higher after a volatile week.

Investors are now awaiting the U.S. employment report later in the day which is expected to show a decline of 110,000 in non-farm payrolls, the first fall this year, according to a Reuters poll.

A better-than-expected jobs report could spark a bout of short-covering and provide a bounce for stocks ahead of the long U.S. weekend.

Just because the economy is slowing doesn't mean it's going into a recession, that's the nuance the market has not figured out. The market has pretty much fully priced in a double-dip recession; at this point we don't agree, said John Canally, an economist at LPL Financial in Boston.

The euro held near five-week highs against the U.S. dollar after rallying three whole cents as speculators were squeezed out of short positions ahead of the U.S. jobs report.

Oil steadied after falling more than 3 percent to below $73, its biggest one-day slide in nearly four weeks, as weak manufacturing data from China and the United states have fueled concerns about economic growth.

U.S. crude for August delivery rose 0.2 percent to $73.13 in Asian trade.

Highlighting concerns over the global economy, China's manufacturing output in June grew at the slowest pace in months on government actions to cool the property market and curb bank lending.

Policy tightening in China and a liquidity crunch due to a large public share offering has pushed the country's benchmark Shanghai Composite index <.SSEC> down more than 27 percent so far this year, the worst performing major stock market after Athens.

(Additional reporting by Elaine Lies in Tokyo; Editing by Kazunori Takada)

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