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(CNN) -- Trading was mixed Friday in Asian and Pacific markets, with Japan's Nikkei index and South Korea's KOSPI index down over worries about the U.S. economy.

The Nikkei was off nearly 0.4% in late trading, while the KOSPI index was down 1.6%. Hong Kong's Hang Seng index gained 1.2% after starting the day in negative territory.

Australia's All Ordinaries index and the Shanghai composite index were both up more than a percent.

On Wall Street, stocks seesawed Thursday after weak year-end retail sales and ahead of the December employment report, which is expected to show massive job losses.

The Dow Jones industrial average lost 0.3%. The Standard & Poor's 500 index added 0.3% and the Nasdaq composite gained 1.1%.

The Labor Department releases the December employment report Friday morning before the start of trade. Employers are expected to have cut 500,000 jobs from their payrolls after cutting 533,000 jobs in November, according to Briefing.com forecasts. The unemployment rate, generated by a separate survey, is expected to have risen to 7% from 6.7% in the previous month.

However, many economists predict the actual numbers will be higher than those forecast. On Wednesday, the payroll services firm ADP reported that the private sector shed 693,000 jobs in December. While the two reports are calculated differently, they both tend to forecast the same trend.

"The jobs report is going to be very weak," said Thomas Nyheim, portfolio manager at Christiana Bank & Trust. "The ADP report was far worse than expected and that tends to be almost a preliminary reading on the non-farm payrolls." Thursday's market

Stocks slipped Wednesday and drifted Thursday as weak labor market reports and dour retail sales reports gave investors reasons to retreat after the recent rally.

But stocks recovered some Thursday afternoon after Democratic lawmakers said they had reached a deal with Citigroup to let bankruptcy judges change home loans in a bid to prevent foreclosures.

Still, that wasn't enough to overshadow job-market worries.

Stocks, demonstrated by the S&P 500, rallied 8% in less than two weeks through Monday's close, as part of a classic year-end rally. But investors have struggled to sustain those gains in the new year.

"We had the Santa Claus rally, but now everyone is returning to reality," said Kenny Landgraf, principal and founder at Kenjol Capital Management.

Landgraf said the combination of the weak retail sales, questions about the economic stimulus plan and jitters about Friday's jobs report were keeping stocks choppy. But stocks should drift higher over the next few weeks as more details of the stimulus plan are revealed, he said.

"Bargain hunters are going to look at what was smashed last year and find things they want to buy," Landgraf said. He noted that recent information from tracking firm Trim Tabs suggests some people are putting money back into the market. Sales slump

As expected, the nation's retailers reported dismal December sales as the recession continued to hit consumer spending. Many retailers warned that quarterly results will decline as well.

Even Wal-Mart, which has been thriving, despite the recession, saw results that were shy of forecasts. The retailer said that stores open a year or more, a metric known as same-store sales, saw a 1.7% rise in December, excluding fuel. That was short of the 2.8 percent gain expected by analysts surveyed by Thomson Reuters. Wal-Mart slumped 7.5%.

Wal-Mart also warned that its fourth-quarter results won't meet forecasts. Other markets

In overseas news, the Bank of England lowered its key interest rate by half a percentage point to 1.5 percent, the lowest level in the bank's history, which dates back to the late 17th century.

U.S. light crude oil for February delivery fell 93 cents to settle at $41.70 a barrel on the New York Mercantile Exchange after slumping 12 percent Wednesday.

Gasoline prices rose 3.5 cents per gallon to a national average of $1.762, according to a survey of credit-card swipes released Thursday by motorist group AAA.