Europe close: Markets tread cautiously ahead of US jobs data

European stocks reversed earlier gains to trade a little lower as caution crept in ahead of Friday’s US non-farm payrolls release.

The benchmark Stoxx Europe 600, Germany’s DAX and France’s CAC 40 were all down 0.3%.

Meanwhile, oil prices were steady after rallying overnight on the back of US Energy Information Administration data showing crude supplies fell by 3m barrels in the week ended 30 September, down for the fifth straight week.

West Texas Intermediate crude oil futures on the other hand continued to gain altitude, rising 1.163% to $52.47 a barrel and Brent crude was up 1.05% at $50.38.

Joshua Mahony, market analyst at IG, said: “Despite an incredible start to the week, we are seeing hesitancy creep in ahead of the week’s main event, with the chances of a December hike likely to be dictated by forthcoming data.

“European and US markets are looking at a relative lull in economic data, with traders hotly anticipating tomorrow's jobs report. However, despite the lack of market moving events, strong gains for stocks and the US dollar earlier in the week will provide us with a theme that is expected to return soon enough.”

Investors will be eyeing the release of the European Central Bank’s minutes of the September meeting at 1230 BST. The minutes could provide some clues as to why the Governing Council chose to remain silent about the possible extension of quantitative easing.

On the corporate front, Deutsche Bank rallied on reports that German officials have said the government was pursuing discreet talks with US authorities to help the lender secure a swift settlement over the mis-selling of mortgage-backed securities.

The banking sector also got a boost from a note by Citigroup, which upped its recommendation on European banks to ‘overweight’ from ‘neutral’.

Deal news also helped to lift the mood, with Osram Licht shares sharply higher on reports it has received a takeover offer from Chinese chipmaker Sanan Optoelectronics Co.

On the downside, budget airline EasyJet tanked after warning that profits for the year would be hit by the weakening of the pound.