LONDON - EUROPEAN stock markets rallied a little on Friday but Tokyo ended sharply lower for a second day running as recession fears abounded and investors nervously awaited key US jobs data, traders said.

In early European trading, the London stock market was up one per cent, Paris gained 0.18 per cent and Frankfurt won 0.36 per cent.

On Thursday Frankfurt had dived almost seven per cent and London and Paris around six per cent as investors shrugged off sharp cuts to eurozone and British interest rates.

'The rate cuts and other recent (economic) measures mean that the worst of the financial crisis is behind us but equities are unlikely to prosper' as recession looms for major economies, said David Woo, an analyst at Barclays Capital Research in London.

The Tokyo stock market ended down 3.55 per cent on Friday, hit by fears of a deep global recession after Wall Street plunged overnight and a profit warning from Toyota Motor Corp, traders said.

Australian shares closed down 2.4 per cent, led lower by mining stocks hit by falling metals prices.

'Despite huge rate cuts in the UK and Europe, the markets continued to fall on continued concerns over the deteriorating global economy,' said Ben Potter, research analyst at IG Markets.

However it was not all doom and gloom across Asia. Hong Kong closed 3.3 per cent higher, Seoul rallied 3.9 per cent, Taiwan share prices gained 1.03 per cent and Singapore won 2.43.

'Financial stocks look attractive on their low valuations,' said President Securities analyst Vickie Hsieh.

Markets were meanwhile nervously awaiting US jobs data that was expected to add to growing fears of a global recession, dealers said.

Investors were bracing for Friday's report on US payrolls for October to show a loss of 200,000 jobs, following a string of downbeat economic data and earnings reports.

October was a brutal month as stock markets plunged amid the escalating global financial crisis. The struggling US economy had already lost 159,000 jobs in September as the credit crunch hit a broad swath of industries.

The International Monetary Fund on Thursday warned that advanced economies would contract next year for the first time since World War II.

US stocks were hammered for a second day in a row on Thursday as the euphoria of Democrat Barack Obama's presidential election victory dissipated.

The Dow Jones Industrial Average plummeted 4.85 per cent, the tech-heavy Nasdaq slumped 4.34 per cent and the Standard & Poor's 500 index lost 5.03 per cent.

'The afterglow following the presidential election lasted about as long as the firefly's flash on a summer evening, which is to say it wasn't long at all,' said Patrick O'Hare at Briefing.com.

'Wall Street wasted little time turning its attention back to a slumping economy.'