Indications: U.S. stock futures pare mild gains after payrolls

By Kate Gibson and Simon Kennedy, MarketWatch

NEW YORK (MarketWatch) â€" U.S. stock futures pared modest gains Friday after the government said the economy added fewer jobs than expected in December and the unemployment rate fell to 9.4%.

“The compromise on taxes will add a lift, but it wasn’t enough for it to happen in December. I’m lighting candles here,” said Jack Ablin, chief investment officer at Harris Bank.

Payrolls fall short of expectations

The jobless rate drops to 9.4% in December, its lowest level in 19 months, but the economy adds just 103,000 new jobs, fewer than expected.

“I’m a data guy, and a lot of the other data points that I track point to much better jobs results, but this has been going on since May,” added Ablin of the Labor Department data, which showed nonfarm payrolls climbing by 103,000 last month, below the 175,000 expected by analysts polled by MarketWatch. Read more about the jobs report.

After dipping into negative territory, futures on the Dow Jones Industrial Average /quotes/comstock/21b!f:dj\h11 (DJH11 11,600, -46.00, -0.39%)  were lately up 4 points to 11,650, and S&P 500 futures /quotes/comstock/21m!f:sp\h11 (SPH11 1,265, -5.00, -0.39%)  remained virtually flat at 1,270.50.

Nasdaq 100 futures /quotes/comstock/21m!f:nd\h11 (NDH11 2,265, -11.25, -0.49%)  rose 4.5 points to 2,280.75.

U.S. markets weakened slightly Thursday, with the Dow Jones Industrial Average /quotes/comstock/10w!i:dji/delayed (DJIA 11,655, -43.63, -0.37%)  dropping nearly 26 points to record its first decline of 2011, as retail and telecommunications shares weighed.

On the corporate front, shares of Borders Group Inc. /quotes/comstock/13*!bgp/quotes/nls/bgp (BGP 0.90, +0.04, +4.55%)  rallied 18% in premarket trade after The Wall Street Journal reported the bookseller is in talks with advisers about restructuring its debt-heavy balance sheet.

Shares of Liz Claiborne Inc. /quotes/comstock/13*!liz/quotes/nls/liz (LIZ 5.90, -1.00, -14.49%)  slumped 19% in before-the-bell action after the company said late Thursday that its fourth-quarter results will miss previous targets, in part because of bad weather in Europe.

Tobacco group Philip Morris International Inc. /quotes/comstock/13*!pm/quotes/nls/pm (PM 56.07, -1.65, -2.86%)  may be another decliner after it was downgraded to hold from buy at Citigroup due to weakening pricing and volume trends across the industry.

European markets were mostly lower Friday, with the U.K.’s FTSE 100 index /quotes/comstock/23i!i:ukx (UK:UKX 5,984, -35.18, -0.58%)  dropping 0.3% to 6,002.63, while in Japan, the Nikkei 225 average closed up 0.1%. See Europe Markets. | See Asia Markets.

Kate Gibson is a reporter for MarketWatch, based in New York. Simon Kennedy is the City correspondent for MarketWatch in London.

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