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By Bloomberg

European stocks fell and emerging-market currencies extended a seventh weekly decline amid speculation a U.S. jobs report will give the Federal Reserve more reason to raise interest rates. Copper touched a six-year low.

The Stoxx Europe 600 Index dropped 0.3 percent at 7:15 a.m. in New York, as media companies and drugmakers followed declines in the U.S. on Thursday. Malaysia’s ringgit and Turkey’s lira led developing-nation currencies lower. The Australian dollar strengthened as central bank comments on employment stoked speculation it was done cutting interest rates. Chinese stocks rebounded on bets the government will take steps to support the market.

Investors will be watching the payrolls report Friday for signs the economy is robust enough to withstand a rate increase as early as next month. The impending Fed move spurred a selloff in emerging markets that’s been exacerbated by a rout in commodities. Industrial metals slumped to multiyear lows on signs of a slowdown in China, compounded by Friday’s unexpected drop in German industrial production.

“We’ve seen this week that market expectations about a Fed hike in September do appear to be moving higher,” said Alvin T. Tan, a foreign-exchange strategist at Societe Generale SA in London. “The icing on the cake would be a pretty strong number on the payrolls.”

Two shares fell for every one that advanced in the Stoxx 600, paring the gauge’s weekly gain to 0.8 percent. Futures on the Standard & Poor’s 500 Index were little changed after the index fell the most in almost two weeks on Thursday.

Rising Wages

The selling came amid data that showed jobless claims hovering near a four-decade low. Friday’s Labor Department report will show employers took on 225,000 workers last month, while the jobless rate held at a seven-year low of 5.3 percent, according to Bloomberg surveys of economists. Average hourly earnings rose 2.3 percent from a year earlier, another survey showed.

“The next two jobs reports will be crucial,” said Didier Duret, who oversees about $219 billion as chief investment officer of ABN Amro Bank NV’s wealth-management unit. “Investors are looking to nail down how wage growth is progressing.”

Traders are pricing in a 48 percent probability that the Fed will raise rates in September, based on the assumption that the effective federal funds rate will average 0.375 percent following the increase, data compiled by Bloomberg show.

Emerging Markets

The MSCI Emerging Markets Index of stocks rose 0.2 percent, trimming its third weekly decline to 1.7 percent. While a Bloomberg gauge of 20 currencies was little changed today, it’s down 1.2 percent over five days, with its seventh weekly loss the longest slump since October. Russia’s ruble and Brazil’s real led declines this week, falling more than 3 percent.

Malaysia’s foreign-exchange reserves dropped below $100 billion for the first time since 2010 after the ringgit slid 18 percent in the past 12 months amid a slump in oil.

Copper dropped as much as 1.2 percent to $5,121 a metric ton, the lowest since July 2009 after the German data. Aluminum fell as much as 0.6 percent, heading for its worst run of weekly losses since January.

Oil headed for its sixth weekly decline amid signs of a persistent supply surplus. U.S. crude inventories remain more than 90 million barrels above the five-year seasonal average, while output expanded last week by the most since May, government data show.

Brent slipped 0.3 percent to $49.38 a barrel, down 5.4 percent for the period. West Texas Intermediate was little changed at $44.68, leaving it 5.2 percent lower this week.

Gold was little changed at $1,089.94 an ounce. Silver gained 0.4 percent and platinum advanced 0.2 percent.

RBA Signals

The Aussie dollar rose against all of its major counterparts, and was on also on course to be the week’s best performer, as central bank Governor Glenn Stevens signaled he’s done his part in weakening the currency and more impetus may now come from the Fed.

Stevens sparked the biggest intraday surge in more than two months Tuesday by refraining from saying the Aussie is overvalued for the first time in 18 months. It climbed another 0.5 percent to 73.83 U.S. cents Friday after the central bank indicated unemployment had peaked.

The euro was little changed at $1.0929 and the yen was at 124.67 per dollar.

The cost of insuring non-investment grade corporate debt climbed to the highest in about a month. The Markit iTraxx Europe Crossover Index, which tracks credit-default swaps on junk-rated companies, rose one basis points to 299 basis points, according to data compiled by Bloomberg. An investment-grade index traded near a two-week high.

‘Catastrophically Weak’

Government bonds were little changed, with the Treasury 10- year note yield at 2.23 percent. Two-year yields -- which are more sensitive to monetary policy expectations -- rose 12 basis points in the past month, while 30-year yields -- which react more to the inflation outlook -- fell 14 basis points.

“The payrolls number would have to be a catastrophically weak number to derail the Fed raising rates in a month or two,” said Michael Ingram, a market strategist at BGC Partners in London. “The market is sensitive to when rates may or may not go up because the growth isn’t there to offset it.”