GLOBAL MARKETS-Asia shares edge higher, focus on U.S. jobs

* MSCI Asia ex-Japan up 0.1 pct to 16-month high

* Nikkei opens flat

* Euro near 1-week low vs dollar

TOKYO, Dec 7 (Reuters) - Asian shares ticked up to a 16-month high on Friday following modest overnight gains in global equities as investors watched progress in U.S. budget talks and awaited U.S. nonfarm payrolls data later in the day.

The euro hovered near a one-week low against the dollar, having fallen after the European Central Bank painted a bleak outlook for the euro zone and discussed cutting interest rates at its policy meeting on Thursday when it kept rates steady.

MSCI's broadest index of Asia-Pacific shares outside Japan was up 0.1 percent, pulled up by a 0.7 percent increase in Australian shares with top miners supported by rebounding iron ore prices and banks recovering from losses.

South Korean shares opened up 0.2 percent while Japan's Nikkei stock average opened little changed.

"The main board is expected to rise on Friday, but gains will be limited in the absence of game-changing events since the last session as we await U.S. employment data," Cho Byung-hyun, an analyst at Tong Yang Securities, said of Seoul shares.

U.S. stocks advanced modestly while the FTSEurofirst 300 index of top European shares hit an 18-month closing high on Thursday, with bullish technicals, an improving global outlook and attractive valuations raising equities' appeal.

As superstorm Sandy disrupted U.S. economic activity, nonfarm payrolls in November are expected to have increased only 93,000, compared to October's 171,000 job gain, a Reuters survey of economists showed. The unemployment rate is seen holding steady at 7.9 percent.

"A soft number should reinforce the case for the Fed doves ahead of next week's FOMC meeting where QE is likely to be increased in order to at least offset the expiration of Operation Twist. Hence a soft report should hurt USD and vice versa," Sean Callow, senior currency strategist at Westpac bank in Sydney, said in a note.

At its Dec. 11-12 meeting, the Federal Reserve is expected to announce a new round of Treasury bond purchases to reinforce quantitative easing, replacing the expiring programme called Operation Twist, under which it bought $45 billion of longer-dated bonds a month while selling its shorter-date holdings.

The dollar traded at 82.44 yen, sticking close to a 7-1/2-month high of 82.84 hit on Nov. 22.

With little to show after a month of posturing, the White House and Republicans in Congress dropped hints on Thursday that they had resumed low-level private talks on breaking the stalemate over the "fiscal cliff" but refused to divulge details.

Markets have been keeping up hope that Washington would eventually avert some $600 billion of tax hikes and spending cuts scheduled to start in January. Economists have warned that failure by Congress to reach an agreement on deficit reduction could tip the U.S. economy back into recession, further weighing on the fragile global economy.

The euro steadied at around $1.2962, after falling nearly 1 percent to $1.2950 on Thursday for its biggest one-day loss in a month, and retreating from a seven-week peak of $1.3127 set mid-week.

ECB President Mario Draghi said on Thursday policymakers held a wide discussion on interest rates, leaving the door open to a possible cut in borrowing costs next year.

The bank's new staff projected gross domestic product in a range of a declining 0.9 percent to growing just 0.3 percent next year, suggesting contraction is far more likely than not. It forecast inflation of 1.1 percent to 2.1 percent next year.

U.S. crude futures inched up 0.2 percent to $86.43 a barrel.