The dollar steadied on Friday and Asian stocks slipped on profit taking ahead of a report expected to show the highest U.S. jobs growth since 1983, supporting this week's wary move back into riskier assets.

More than two-thirds of the forecast 513,000 new jobs will likely be temporary hires for the government census, giving mixed signals to investors eager to take profits on their bullish bets on the dollar, which hit a four-year high against the euro on Tuesday.

Financial bookmakers reckoned major European stock indexes would open up as much as 0.5 percent ahead of the payrolls report, which is used as a gauge of the U.S. economy. U.S. stock futures drifted lower in calm trade.

Global equity markets and U.S. Treasury yields over the past week have both recovered nearly a quarter of the losses incurred over the last two months when the European sovereign debt crisis triggered a scramble out of risk.

The U.S. payrolls report may provide a supportive role to this rebound.

There is talk of 600,000 jobs being added and that kind of number will show that the U.S. economy is showing considerable momentum, said Tony Morriss, senior currency strategist at ANZ in Sydney.

Still, fears about tougher funding conditions in Europe and the impact of spartan fiscal policy on growth may keep a heavy lid on the nascent revival in risk taking.

Indeed, Hungary's ruling party on Thursday said the country's finances were in much worse shape than previously expected, an echo of recent warnings from Greece.

The euro was largely unchanged from Thursday in New York at $1.2178, still trying to climb from an overnight low of $1.2150. It touched a four-year low around $1.2110 on Tuesday.

The dollar was up 0.1 percent against the yen at 92.67 yen. Speculation that Japan's next prime minister will be more hawkish against yen strength has spurred traders to cut their bets on the yen this week.

Finance Minister Naoto Kan was chosen as Japan's next prime minister, the aging and deeply indebted country's fifth premier in three years.

In equity markets, the MSCI index of Asia Pacific stocks outside Japan edged down 0.3 percent <.MIAPJ0000PUS>, weighed mostly by profit taking in the materials sector after a surge on Thursday.

The index is trading at 12 times forecast 12-month earnings, the lowest valuation since March 2009, when the latest bull market began. That kind of value is probably enough to pull some investors back into the market, though uncertainty over Europe could keep intraday volatility high.

Japan's Nikkei share average <.N225> finished 0.1 percent lower after posting its biggest single-day rise in six months on Thursday. Shares of retailers were the biggest drag on the index, while exporters and technology sector stocks offered support.

The prospect of a new prime minister that would keep the yen weak was seen as a plus for exporters, though it was still too early to drive trading consistently.

There's still a lot that's unknown -- who will be in the cabinet, what the policies will be. That makes it hard for the market to take it up as a factor, said Yutaka Miura, senior technical analyst at Mizuho Securities in Tokyo.

U.S. crude for July delivery slipped 0.4 percent to $74.34 a barrel. Oil is down nearly $12 in the last month.

(Additional reporting by Elaine Lies in TOKYO and Anirban Nag in SYDNEY; Editing by Kazunori Takada)

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