SINGAPORE -- Asian stocks and the dollar firmed on Friday after U.S. troops took control of Baghdad airport, a key war objective that suggested the conflict could be nearing a climax.

But European stock markets were expected to open flat as investors braced for gloomy U.S. labor data later in the day after weak economic numbers on Thursday.

Gold, traditionally sought at times of tension, hit a fresh four-month low after the news from Iraq indicated U.S.-led forces could overthrow President Saddam Hussein earlier than anticipated.

It has been just over two weeks since the start of the conflict and the market's consensus view, according to a Reuters poll, had been that it would last six weeks.

Oil dipped, extending sharp falls earlier in the week. Bond prices also fell, reversing gains chalked up on the U.S. data.

Asian stocks moved higher as U.S. forces said they had seized control of Baghdad's International Airport in the first ground attack on the capital.

"It looks like the U.S. is getting close to taking Iraq and that is of course being taken positively by the market," said Masaru Kazama, head of equities at Nissan Securities in Tokyo.

Japan's benchmark Nikkei average closed up 0.7 percent after spending most of the day in the red.

Hong Kong and South Korean stocks added two percent while Taiwan gained more than three percent. The Australian and Singaporean indices also gained. ??????? Risks Set to Rise ??????

But many analysts advised caution, especially as the situation would remain fluid into the weekend.

"The riskiest stage of the war in Iraq is approaching and at the same time data is showing the U.S. economy is weaker than expected," said Hiroyuki Nakai, chief strategist at Tokai Tokyo Securities.

Investors were worried that data on U.S. jobless claims and activity in the services sector on Thursday signaled continuing weakness in the world's biggest economy.

Both numbers pointed to possible gloomy news when U.S. labor data for March is announced at 1330 GMT. Analysts expect another rate cut by the U.S. Fed in response.

The data weighed on U.S. stocks, wiping 0.54 percent off the Dow Jones industrial average but the dollar shrugged off early gloom over the economic outlook after U.S. troops seized the airport.

"Japanese investors are buying dollars, because they're hearing that U.S.-led forces have entered Baghdad," said Toru Umemoto, currency strategist at Morgan Stanley.

But the rumors have not been confirmed. Latest reports from Iraq said U.S. forces deployed tanks, troops and warplanes to wrest control of Baghdad airport, with armored units advancing to the outskirts of the city.

The dollar firmed to around 119.95 yen from 119.39 in late New York trade after moving briefly over 120 yen for the first time since Monday. The euro dipped to $1.0738 from $1.0762. (Reuters)