LONDON -- Stock markets inched upwards in Europe and Asia on Friday as optimism about the rapid U.S. advance on Baghdad was dampened by poor us economic figures, while the dollar also crept up and oil prices slipped slightly.

U.S. forces were in control of large parts of Baghdad airport on Friday, and with some troops reportedly just 15 kilometers (nine miles) from the city centre, a final advance appeared imminent.

However prices were dampened by poor economic data from the United States a day earlier, showing that the war had helped shrink the country's services sector for the first time in 14 months as well as swelling jobless queues.

But in Europe analysts said that -- for now -- war remained the dominant market driver, reported AFP.

"At the moment, economic fundamental are second and third page news and the war is front pages news, which is driving the market," said Brewin Dolphin Securities strategist Mike Lenhoff.

The British FTSE 100 index of leading shares rose 0.6 percent to 3,793.7 points in early trading, the German DAX 30 index was up 1.9 percent to 2,617.7 points and the French CAC 40 index rose 1.2 percent to 2,823.4 points.

The rises came despite the end of Wall Street's two-day rally, which ground to a halt Thursday with the release of the disappointing economic data.

The Dow Jones industrials closed down 0.5 percent at 8,240.38 points, while the NASDAQ composite stayed all-but unchanged at 1,396.58 points.

European markets would also pay more attention to economic news once the war and the "obsession with CNN" ended, Lenhoff said.

"I think when the war is over, the market will return to fundamentals, and the first impulse will be that they are not very strong," he said.

The news was slightly more positive from Asia earlier Friday, where Japan's Nikkei 225 index gained 0.7 percent to close at 8,074.12 points.

Even the badly-hit Hong Kong and Singapore markets were up on a technical rebound from losses prompted by the spread of the SARS respiratory virus, which had killed 17 people in Hong Kong and five in Singapore as of Friday.

The dollar also edged up on the news from the Persian Gulf.

The euro dipped to 1.0722 dollars in morning European trading from 1.0754 late on Thursday in New York.

The dollar rose to 120.04 yen from 119.44 on Thursday. WESTLB economist Michael Klawitter said the coalition forces' advance "leaves the dollar well protected even against a weaker-than-expected U.S. jobless report and the balance of risk in the dollar remains on the upside in the near term."

Oil prices fell back, shedding gains of the previous day as traders took heart from developments in Iraq.

In London, the price of reference Brent North Sea crude oil for may delivery slipped 63 cents to 24.87 dollars a barrel in early trades.

New York's benchmark light sweet crude oil contract for May delivery fell 55 cents to 28.42 dollars a barrel in out-of-hours electronic trading.

"There is some profit-taking because it is Friday and because the allied troops are into Baghdad, taking the airport, and this releases the tension a little bit," said GNI trader Keith Pascall.

Gold prices fell again, with the spot price on the London bullion market down 2.80 dollars from the previous closing price at 322.45 dollars.

Bond prices were down. The yield on the 10-year German government bond rose one basis points, or 0.01 percentage points, to 4.2 percent. Bond yields and prices move in opposite directions.