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The government's non-farm payrolls report, due at 8:30 a.m. EDT, is seen showing a gain of 190,000 jobs in March, while the unemployment rate is expected to remain steady at 8.9 percent. Reports earlier this week suggested the outlook for the labor market was improving.

European stocks and oil rose in anticipation of the report, which could confirm the U.S. economy continued to gain strength despite the turmoil in the Middle East and North Africa and the nuclear crisis in quake-ravaged Japan.

Investors are also betting a strong payrolls number could help the S&P 500 break above 1,330, a level that has been unbreachable despite several attempts in the past month. Technical momentum may kick in if it breaks past the level, lifting stocks further and closing the gap to a 2011 high of around 1,344.

S&P 500 futures rose 5.7 points and were above fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average futures added 38 points and Nasdaq 100 futures rose 8.25 points.

Other macroeconomic data scheduled for Friday includes the Institute for Supply Management report for March, due at 10 a.m. EDT (1400 GMT). The release follows upbeat Chinese factory data that eased concerns about monetary tightening.

Friday is the first day of the second quarter. The S&P gained 5.4 percent in the first quarter.

The World Trade Organization said late Thursday that Boeing Co (BA.N) received at least $5.3 billion in illegal U.S. subsidies.

Goldman Sachs Group Inc (GS.N) borrowed five times from the U.S. Federal Reserve's discount window since the start of the financial crisis despite a senior executive's testimony that the bank used it only once.

U.S. stocks ended the first quarter with the barest of moves on Thursday.

(Editing by Jeffrey Benkoe)

Nonfarm payrolls rose 190,000 last month, according to a Reuters survey, after increasing 192,000 in February. The anticipated job gains come amid indications the economy suffered a minor setback early in the year as bad weather and rising energy prices dampened activity.

"All the evidence is pointing to a strengthening labor market," said Bill Cheney, chief economist at John Hancock Financial Services in Boston.

The Labor Department will release the closely watched employment report at 08:30 a.m. on Friday.

While the report will indicate sufficient underlying strength in the economy to cushion it against the impact of high energy prices, it will not be strong enough to discourage the Federal Reserve from its ultra-easy monetary policies.

Policymakers at the U.S. central bank are, however, debating whether they should start considering withdrawing some of their massive economic stimulus.

The government will revise January and February employment figures with the March report. The recent trend has been for payrolls to be adjusted upward.

The private sector will account for all the new jobs in March, with an expected 200,000 positions. Although rising energy prices -- boosted by unrest in the Middle East and North Africa -- are eroding consumer confidence, economists do not expect businesses to put the brakes on hiring just yet.

"Employment gains have been modest in recent months, so in that sense I think businesses that were initially very wary of taking on permanent full-time employees are feeling very confident now than was case some months ago," said Richard DeKaser, an economist at Parthenon Group in Boston.

"As a result they are more willing to make those kinds of long-term commitments."

STEADY UNEMPLOYMENT RATE

The strengthening labor market tenor will also be underscored by the unemployment rate, which is expected to hold steady at a near two-year low of 8.9 percent.

The jobless rate, which is derived from a survey of households, has dropped 0.9 of a percentage point since November, mostly reflecting employment gains rather than a rise in the number of discouraged job-seekers.

It could start rising as the improving employment picture coaxes those who have given up the search for work to re-enter the labor market. Some economists believe the unemployment rate could have edged down in March.

"It is always possible that as the job market improves, people will start looking again and the unemployment rate could go up," said John Hancock's Cheney. "But the normal pattern is once it starts coming down as rapidly as it has over the last few months, it keeps on going down."

Worryingly for policymakers, sustained growth in orders allowed European manufacturers to pass on the costs of soaring raw materials to customers, with prices rising at their fastest rate since at least late 2002. <EUR/PMIM>

In Asia's big economies, similar surveys of manufacturers showed worries that high oil prices could scupper growth were unfounded for now, even though China's outlook was clouded by signs of disruptions to trade with Japan.

Markit's Eurozone Manufacturing Purchasing Managers' Index (PMI), which records factory activity across all the major euro area economies, dipped to 57.5 last month from February's near 11-year high of 59.0, marking the 18th month above the 50 mark that divides growth from contraction.

The output price index rose to its highest level since Markit began tracking it in November 2002 and, coupled with data on Thursday that showed euro zone inflation at 2.6 percent in March, will cement expectations of a rate rise next week.

"They (PMIs) are still at very robust levels and pointing to healthy growth in the industrial sector, suggesting that the euro zone recovery will continue in the near term and gain some steam," said Ben May at Capital Economics.

A pair of China PMIs showed factories were growing moderately rather than booming, and while some economists warned of a continued slowdown, few thought slowing production would slam the brakes on the world's second largest economy.

"It's growing at a slow and steady speed as tighter monetary policy impacts," said Stephen Green, an economist at Standard Chartered in Shanghai. "I'm not overly worried about growth."

China's official purchasing managers' index (PMI), compiled by the government, rose to 53.4 in March from a six-month low of 52.2. A comparable survey published by HSBC steadied near seven-month lows at 51.8.

In India, the mood among manufacturers was more upbeat. An HSBC-sponsored PMI there compiled from a survey of around 500 firms held steady at a four-month high of 57.9.

British manufacturing growth weakened from a survey record high the prior month after the inflow of orders slowed sharply but the prices charged index hit a survey record, showing manufacturers' pricing power is rising. <GB/PMIM>

Comparable figures due at 1400 GMT are expected to show a light weakening of growth in the United States.

PRICES STILL RISING, RATES TO FOLLOW

The surveys suggested policymakers' main focus in months ahead will be on inflation concerns.

The European Central Bank has already signaled it intends to raise interest rates next week from a record low of 1.0 percent and the Bank of England, facing inflation more than double its target, may follow suit as soon as May.

Revised budget figures for last year have added to Lisbon's woes as it faces making 12 billion worth of debt payments in April and June that investors speculate may push state finances over the edge.

President Anibal cavaco Silva on Thursday called a snap election for June 5 following the government's resignation earlier this month and warned the next government faced an unprecedented economic crisis.

The average yield on the June 2012 bond rose to 5.793 percent from 3.159 percent in the sale in July. The same maturity yielded over 7 percent bid in the secondary market earlier on Friday and analysts expected the bond to yield at least 6.5 percent.

"Today's result will boost confidence it will be able to fund itself until a new government is sworn in toward the end of June," said Rabobank strategist Richard McGuire.

"This does not, though, obviate the fact that it is fundamentally insolvent - i.e. it is clearly in a situation where debt will have to be issued to cover servicing costs thereby resulting in a snowballing of liabilities."

Orlando Green at Credit Agricole in London said that although the IGCP debt agency seemed to have lined up investors for the auction beforehand, the yield level being below the secondary market was a surprise.

"I don't know how sustainable it is, but this auction reduces the fear that they won't be able to repay their debts coming due this month," he said.

"Still, they can't borrow at 8-9 percent going forward, so it's unrealistic to expect they won't be bailed out in the end."

Bond yields spiked to new record highs on Thursday on the back of figures showing the 2010 budget deficit was more than a percentage point higher than the 7.3 percent of GDP targeted by the government. They were flat on Friday.

Prime Minister Jose Socrates, who now heads a caretaker government, has resisted asking for an international bailout after Greece and Ireland, but his resignation last week after parliament rejected budget austerity threw the country into political crisis and prompted downgrades by rating agencies.

Portugal has to redeem 4.2 billion euros of bonds on April 15 and 4.9 billion euros in June.

The premium investors demand to hold Portuguese benchmark 10-year bonds was practically unchanged at 536 basis points on Friday after Thursday's euro lifetime record highs.

(Reporting by Sergio Goncalves, Shrikesh Laxmidas and Andrei Khalip; writing by Andrei Khalip, editing by Patrick Graham)