While the US economy generated 222,000 jobs in June, more than expected, the unemployment rate ticked up and sluggish wage growth failed to meet market targets, the Labor Department reported.
Wall Street managed a small rebound following a sharp-sell off the previous day, while most European markets languished mildly in the red as analysts wondered what to make of the mixed signals on the state of the American economy.
"Disappointing US wage growth is the key takeaway," said analysts at ING.
Wage increases are key to inflationary expectations which the US Federal Reserve has said justify two more rate increases this year.
But ING said the latest wage figure "doesn't help the Fed's quest to convince markets" that recent inflation weakness has been only transitory.
"Rate expectations have declined. The market is expecting only one more rate hike this year," said AxiTrader market analyst Milan Cutkoviche.
- 'No mad rush' -
Others said the Fed's rate trajectory was probably still intact, resulting in the dollar holding firm against its major rivals Friday, if only just.
"The slower wage growth represents a slight disappointment, and explains why we are not seeing a mad rush from traders to purchase the dollar," observed Lukman Otunuga, an analyst with FXTM.
Jasper Lawler at LCG still called the pickup in US jobs growth "welcome", saying it meant "markets were a little more becalmed".
Expectations that the eurozone's central bank, the ECB, will eventually start to phase out easy credit weighed on European bond prices, pushing up yields, which in turn helped to depress stocks.
The British pound also fell against the dollar following some poorly-received UK economic data, including a drop in house prices, a dip in industrial output and widening of Britain's trade deficit.
- 'Rebound hard to come by' -
The currency's weakness boosted shares in exporting companies and helped the London stock market cling to positive territory.
Frankfurt also eked out a small gain at the closing bell, while Paris was slightly weaker.
Wall Street managed a small rise on the Dow index during the morning session in New York.
Traders were also nervously eyeing the G20 summit in Germany against the backdrop of a diplomatic standoff between North Korea and the West.
Earlier Friday Asian markets headed into the weekend mostly on a negative note after Thursday's sell-off on Wall Street following a previous weak set of US jobs data and sliding oil prices which fuelled losses across the energy sector.
And with traders nervous over North Korea's latest missile provocation, analysts said there is little desire to buy risky assets such as stocks.
"Sliding oil prices and geopolitical tension at the G20 meant a decisive rebound from the recent heavy selling in stocks and bonds was hard to come by," said LCG's Lawler.