LONDON - Stock markets pushed higher on Friday as a positive US jobs report apparently outweighed the latest volley in US-China trade threats.

Approaching midday in New York, both the Dow and S&P 500 were in positive territory, although the tech-heavy Nasdaq Composite dipped.

In Europe, the markets in London, Frankfurt and Paris all closed with gains. Drops in the value of the pound and euro helped the business prospects of firms, thus supporting equity values.

Trade tensions ratcheted higher as Beijing warned it was prepared to impose new tariffs on $60 billion worth of US goods if Washington ups the ante in the escalating US-China trade war. The commerce ministry issued a statement saying the new duties would be applied if Washington pulled the trigger on President Donald Trump's threat to raise tariffs on $200 billion worth of Chinese goods.

"Traders are worried the tough line that both sides are taking could hurt global growth," said analyst David Madden at CMC Markets UK. However traders also had the US monthly nonfarm jobs report to ponder. It found that the US economy continued to create jobs in July but at a slower pace, while the tighter labour markets drove the unemployment rate back to near-record lows.

Employers added 157,000 net new positions, with slower gains in auto manufacturing, transportation and mining, while the jobless rate fell to 3.9 percent, according to the closely-watched monthly Labor Department report. Economists had been expecting a stronger result of 190,000 new hires, but the July number looked smaller after strong upward revisions to gains in May and June.

"Some will be inclined to suggest that the headline miss on nonfarm payrolls in July is indicative of a tight labour market where it is getting hard to find qualified workers and/or a burgeoning sign of some hiring softness due to tariff concerns," said analyst Patrick O'Hare. However analysts pointed to the revisions and the three-month figure, which showed the pace of hirings increasing, as indicative of a positive report that would support further increases in US interest rates.

"During the week, the Federal Reserve issued an optimistic outlook on the economy, and suggested there will be two more rate hikes in 2018," said CMC Markets UK's Madden.

"Today's jobs report points to a continuation of the positive momentum in the jobs market, and adds weight to the argument for a hike in September and December," he added. Asian indices traded mixed after another painful week as fears of an all-out trade war between Beijing and Washington.

Adding to the pain of recent losses, China's stock market was overtaken as the world's second-biggest by Japan's on Thursday, having been hit by trade war fears and slowing economic growth.

Bloomberg News figures showed Chinese stocks were worth $6.09 trillion, compared with $6.17 trillion in Japan. The US market is worth $31 trillion.

"Investors are paying attention to government policies as the US-China trade war will remain uncertain for now," Yoshihiro Okumura, general manager at Chibagin Asset Management, told AFP in Tokyo.

"On the other hand, Japanese companies are showing strong results in general, sustaining share prices on the Tokyo Stock Exchange."