(Updates prices ahead of European market open)

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U.S. stock futures decline as focus shifts to spending

bill

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Trade deals elusive ahead of higher tariffs on July 9

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Trading thinned by Wall Street, Treasuries holidays for

July 4

By Kevin Buckland

TOKYO, July 4 (Reuters) - Most Asian equity markets

struggled on Friday and European stocks looked set to open

weaker, despite record highs for Wall Street overnight, as U.S.

President Donald Trump's deadline for trade deals loomed next

week.

The dollar retraced some of Thursday's gains with U.S.

markets already shut for the holiday-shortened week, as traders

considered the impact of the sweeping spending bill that Trump

is expected to sign into law later in the day.

U.S. S&P 500 futures edged down 0.3%, following a

0.8% overnight advance for the cash index to a fresh all-time

closing peak. Wall Street is closed on Friday for the

Independence Day holiday.

Pan-European STOXX 50 futures sank 0.5%.

Trump said Washington will start sending letters to

countries on Friday specifying what tariff rates they will face

on exports to the United States, a clear shift from earlier

pledges to strike scores of individual deals before a July 9

deadline when tariffs could rise sharply.

Investors are "now just waiting for July 9," said Tony

Sycamore, an analyst at IG, with the market's lack of optimism

for trade deals responsible for some of the equity weakness in

export-reliant Asia, particularly Japan and South Korea.

At the same time, Thursday's jobs data showed "the U.S.

economy is holding together better than most people expected,

which suggests to me that markets can easily continue to do

better" from here, Sycamore said.

Japan's Nikkei rose 0.1% as of 0550 GMT after

flipping between gains and losses in early trading. South

Korea's KOSPI sank 1.8%.

Hong Kong's Hang Seng dropped 0.4%, although mainland

Chinese blue chips added 0.7%.

Taiwan's equity benchmark shed early gains to

decline 0.9%.

Investors cheered the surprisingly robust jobs report on

Thursday, sending all three of the main U.S. equity indexes

climbing in a shortened session.

Following the close, the House narrowly approved Trump's

signature, 869-page bill, which would add $3.4 trillion to the

nation's $36.2 trillion debt, according to the nonpartisan

Congressional Budget Office.

TRADE THE KEY FOCUS IN ASIA

Trump said he expected "a couple" more trade agreements

after announcing a deal with Vietnam on Wednesday to add to

framework agreements with China and Britain as the only

successes so far.

U.S. Treasury Secretary Scott Bessent said earlier this week

that a deal with India is close. However, agreements with Japan

and South Korea, once touted by the White House as likely to be

among the earliest to be announced, appear to have broken down.

"High tariffs on the large economies, including Europe and

Japan, will increase the 'sell U.S.' narrative in our view,

weighing on USD," Kristina Clifton, a strategist an Commonwealth

Bank of Australia, wrote in a client note.

"However, news of trade deals ahead of the 9 July deadline

would support the USD against the major currencies of GBP, EUR

and JPY."

The U.S. dollar rallied overnight, taking it up as much as

0.7% versus a basket of major peers after the robust

payrolls data saw traders take any expectations for a Federal

Reserve interest rate cut this month off the table. It ended

Thursday with a 0.4% rise.

On Friday, the U.S. currency gave back a little of those

gains, slumping 0.4% to 144.31 yen and sliding 0.3% to

0.7926 Swiss franc.

The euro added 0.2% to $1.1783, while sterling

gained 0.2% to $1.3681.

The U.S. Treasury bond market is closed on Friday for the

holiday, but 10-year yields rose 4.7 basis points

(bps) to 4.34% while the 2-year yield jumped 9.3 bps

to 3.882%.

Gold firmed 0.4% to $3,339 per ounce.

Brent crude futures fell 21 cents to $68.59 a

barrel, while U.S. West Texas Intermediate crude lost 11

cents to $66.89.