U.S. stock futures had soared early Friday after Microsoft offered to buy Yahoo, but a weak January employment report dragged futures lower.

Microsoft Corp. is making an unsolicited US$44.6 billion offer for Yahoo Inc. in a move to boost its competitive edge against Google Inc. in the online services market.

U.S. employment unexpectedly tumbled last month for the first time in more than four years. But there were some bright spots, including a slight drop in the unemployment rate and sharp upward revision to December payroll growth.

Nonfarm payrolls fell 17,000 in January, the U.S. Labor Department said today, the first drop since August 2003, when payrolls slid 42,000. Gains in services like health care, retail trade and leisure offset declines in other sectors including manufacturing, construction, financial services and government.

December payrolls were revised up by 64,000 to show an 82,000 increase. However, November job growth was revised down by almost half, to 60,000. The unemployment rate fell, as expected, to 4.9% from 5%.

Here at home, prices for manufactured products increased for a second consecutive month in December, led by motor vehicles and refined petroleum products, Statistics Canada reported today.

On the other hand, the rise in prices for raw materials was dampened by the stabilization of crude oil prices and a decrease in non-ferrous metal prices.

The Canadian dollar opened at US100.38¢, up about three-quarters of a cent after falling more than a full U.S. cent Thursday.

In other M&A news, Chinalco said it has teamed up with Alcoa to buy a US$14.05 billion minority stake in mining giant Rio Tinto.

In today’s earnings news, Exxon Mobil Corp. posted an annual profit of US$40.6 billion, as the world’s largest publicly traded oil company benefited from all-time high crude oil prices at year’s end.

Crude futures fell 58¢ to US$91.17 a barrel Friday morning.

Spot gold was higher at US$933.3 an ounce, up 0.4% from Thursday’s high of US$929.90 in New York.

Overseas, Japan’s Nikkei closed down 0.7%. In Europe, London’s FTSE rose 1.34%, Frankfurt’s DAX gained 1.16% and Paris’s CAC 40 rallied 1.66%.

Toronto stocks made solid gains Thursday boosted by industrial and financial issues. The S&P/TSX composite index closed up 156.87 points, or 1.21%, at 13,155.08.

All of the 10 main TSX groups made gains.

The junior S&P/TSX Venture composite index closed up 9.31 points, or 0.36%, at 2,564.69.

In New York, markets surged ahead after finding solace in assurance from bond insurer MBIA Inc. that its AAA ratings would survive.

The Dow Jones industrial average soared 207.53 points, or 1.67%, to close at 12,650.36.

The S&P 500 jumped 22.69 points, or 1.67%, to 1,378.50.

The tech-heavy Nasdaq composite index rose 40.86 points, or 1.74%, to shut down at 2,389.86.

For the month, the Dow lost 4.6%, marking its worst January since 2000. The S&P lost 6.2%, its worst January since 1990. For the Nasdaq, the 9.9% decline on the month was its worst-ever January performance.