EUROPE MARKETS: European Stocks Pare Losses After U.S. Jobs Report

By Sara Sjolin, MarketWatch Features Dow Jones Newswires

Sanofi shares fall after the French drugmaker loses a patent case

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European stocks trimmed Friday losses somewhat in afternoon action after the closely watched U.S. jobs report painted a mixed of the country's job market.

The headline nonfarm-payrolls number missed expectations at 156,000, but wages jumped by the fastest rate in seven years. The November jobs number was revised sharply higher.

"Should earnings continue on the current trajectory then inflationary pressures should continue to build and enable the Fed to raise interest rates three times this year as planned, even in the absence of a large fiscal stimulus package from a Trump government," said Craig Erlam, senior market analyst at Oanda, in a note

After the data, the Stoxx Europe 600 index trimmed its loss to 0.2% at 364.87, after trading around 365.34 ahead of the numbers. For the week, the benchmark was set for a 1.1% gain.

Shares of Sanofi SA (SAN.FR) (SAN.FR) weighed on the benchmark, falling 2.6% after the French drugmaker lost a patent case related to its cholesterol drug Praluent (http://www.marketwatch.com/story/sanofi-regeneron-cholesterol-drug-barred-by-judge-2017-01-05).

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The drop also added pressure on France's CAC 40 index lower, which fell slightly to 4,899.542.

Elsewhere, Germany's DAX 30 index lost 0.1% to 11,576.24, while the U.K.'s FTSE 100 index rose 0.1% to 7,198.75 (http://www.marketwatch.com/story/ftse-100-breaks-8-day-winning-streak-ahead-of-us-jobs-report-2017-01-06).

Stoxx 600 upgrade: The pan-European benchmark has jumped almost 6% in the past month, but the rally isn't over yet, strategists at Bank of America Merrill Lynch said in a note on Friday. They lifted their 2017 year-end target to 390 from 360, saying a weaker euro, stronger economic growth and rising commodity prices would help boost corporate earnings.

That means the index has 7% upside from Friday's levels, according to the BAML forecast.

The bank is also staying bullish on risk assets overall as laid out in our Need to Know column today (http://www.marketwatch.com/story/time-to-go-for-the-big-short-with-stocks-heres-when-youll-know-2017-01-06).

Movers: Lloyds Banking Group PLC (LLOY.LN) rose 1.7% after Barclays lifted the lender to overweight from equal weight. Barclays said the U.K.'s economic prospects remain challenging, but are less severe than previously expected.

Rotork PLC (ROR.LN) jumped 3.8% after Goldman Sachs started coverage of the manufacturing company with a buy rating.

Deutsche Lufthansa AG (LHA.XE) (LHA.XE) dropped 3.1% after UBS cut the airline to sell from neutral.

Economic docket: Optimism over the eurozone economy rose more than expected in December. The European Commission's Economic Sentiment Indicator climbed to 107.8 last month, up from 106.6 in November.

German manufacturing orders fell (http://www.marketwatch.com/story/german-manufacturing-orders-slump-in-november-2017-01-06-2485488) 2.5% on the month in November, after rising strongly in October. Economists polled by The Wall Street Journal had forecast a 1.5% drop.

Retail sales in Germany dropped in November, too, down 1.8% from October. Overall for the eurozone, retail sales fell 0.4% in November following a surge in October.

France's trade deficit narrowed (http://www.marketwatch.com/story/french-trade-deficit-narrows-as-exports-rise-2017-01-06) in November as exports jumped, lifted by sales of transportation equipment, the French customs office said Friday.