Asian markets traded mixed early on Friday, amid lower oil prices and caution ahead of all-important US June non-farm payrolls data.

The S&P/ASX 200 was flat after initially opening lower, weighed by its energy subindex, which was down 0.3 percent.

In Japan, the Nikkei 225 was up 0.25 percent; while across the Korean strait, the Kospi was lower by 0.18 percent.

Chinese mainland markets were lower, with the Shanghai composite down 0.55 percent and the Shenzhen composite slipping 0.1 percent.

US crude prices dropped 4.83 percent to USD 45.14 a barrel on Thursday after an Energy Information Administration (EIA) report showed stockpiles fell 2.2 million barrels in the week to July 1, far less than the 6.7 million barrel drawdown the American Petroleum Institute reported on the previous day.

But crude prices were recovering during Asian trade; US crude prices were trading up 0.91 percent at USD 45.54, while Brent futures were up 1.1 percent at USD 46.91 after it settled at USD 46.40.

"Oil will be front and centre in the Asian session...The real focus in the market is the lack of decline seen in gasoline inventories," explained IG market strategist Angus Nicholson. "Summer driving season in the U.S. will end within the next two months, which is when demand for gasoline is at its highest, and yet gasoline inventories are not declining as expected.

"This is developing into a major concern for the oil market because once the seasonal demand disappears, gasoline inventories could be set to explode in the second half of the year," he added.

Meanwhile, Japan's May current account surplus stood at 1.81 trillion yen (USD 17.96 billion), falling 3.72 percent from a month earlier, Reuters reported. The stronger yen curbed gains from investment overseas, but tourism income hit a record high.

US June non-farm payrolls are due later in the day and investors will watch for signs that May's disappointing headline figure of 38,000 was an anomaly. Friday's data is expected to show a rebound to 175,000 nonfarm payrolls, according to Thomson Reuters - a number that will likely influence the Federal Reserve's easing bias for the rest of the year.

Despite expectations of a strong payroll figure, which would likely strengthen the dollar, funds continued to favor safe havens, such as the yen, amid widespread market jitters in the wake of the UK vote to exit the European Union (EU).

"Most economists and investors expect a strong recovery in job growth after last month's hauntingly weak report," said Kathy Lien, managing director of FX strategy at BK Asset Management in a Friday note. "With such a view, we would normally expect the dollar to be trading higher against the yen, but instead of rising, USD/JPY fell for the fifth trading day in a row,"

The Japanese yen traded at 100.81 against the dollar early on Friday, compared with levels near 103 a week ago.

The British pound traded at USD 1.2923 as of 9:30 a.m. HK/SIN on Friday. The pound had dropped to a 31-year low of USD 1.2796 on Wednesday amid uncertainty surrounding the Brexit vote.

Wall Street's middling finish overnight may have also weighed sentiment in Asia. The Dow Jones industrial average finished lower by 0.13 percent, the S&P 500 ended nearly flat and the Nasdaq composite finished up 0.36 percent, its sixth positive session in seven days.

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First Published:Jul 8, 2016 7:36 AM IST