European Shares Flat as Traders Brace for Jobs Data


European shares saw a tentative move lower on Friday, with investors cautious before a U.S. jobs report that could determine when the Federal Reserve starts scaling back its monetary stimulus.

The FTSEurofirst 300 was down 0.1 percent at 1,222.96 points by 1030 GMT, having been trapped in a tight 5.6-point trading range in Friday's session. The euro zone's blue-chip Euro STOXX 50 was flat at 2,773.46 points.

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The U.S. non-farm payrolls report, due at 1230 GMT, will be scrutinised for clues on whether the U.S. recovery is strong enough to allow the Fed to move to taper asset purchases as soon as this month.

The world's biggest economy is expected to have added 180,000 non-farm jobs last month, keeping the unemployment rate steady at 7.4 percent.

Analysts, however, say the data could top forecasts in light of encouraging U.S. economic data in the past few days, particularly non-manufacturing ISM figures.

Societe Generale strategist Paul Jackson reckoned that figures of 220,000 for non-farm jobs added and 7.3 percent for the unemployment rate would still constitute a positive surprise, but that any equity market reaction would be muted.

"If you get a strong number then that probably just puts the nail in the coffin as far as tapering (starting this month) is concerned ... and that may cause equity markets to sell off a little bit, but I think any selling off will be extremely limited," he said

"I believe that the stronger the data, the better, because I want economies on both sides of the Atlantic to be growing; I think that will, in the end, be beneficial for European equities."

While Friday's trade saw the FTSEurofirst 300 on a slightly weaker footing, the index has risen 2.3 percent so far this week, putting it on track for its best weekly showing since mid-July.

Signs of an economic recovery in Europe have prompted several strategists to raise their ratings on European shares, with Citi and UBS both upgrading the region this week.

Meanwhile, U.S. investors added to their holdings of European equities for a 10th straight week in the seven days to Sept. 4 as they switched out of domestic, emerging market and Japanese stocks, Lipper data showed.

Charles Stanley technical analyst Bill McNamara suggested that the Euro STOXX 50 was well supported around current levels, noting its recent pull-back was curtailed by the 50-day moving average, now at 2,746 points.

Further, at the recent low of 2,727 hit on Aug. 30 it had retraced 38.2 percent - a Fibonacci level - of the previous advance, "so it is clear that there are buyers when it gets close to 2,700", he said.