Europe close: Shares dive after US jobs report

European stocks retreated, with investors opting for caution following a US jobs report for the month of January that left economists divided in their wake and weaker than expected figures on German factory orders.

The benchmark DJ Stoxx Europe 600 index finished 0.87% lower and Germany’s DAX by another 1.14%, while France’s CAC 40 lost 0.66%.

“Much weaker than expected German factory orders clearly highlight that slowing global growth especially in China but also increasingly in the US is starting to impact Europe's largest economy in a negative way,” said Markus Huber, senior analyst at Peregrine & Black.

Later in the afternoon, the US Department of Labor reported a 151,000 person increase in US non-farm payrolls, noticeably below the 190,000 print which economists had anticipated.

In a more constructive vein, average weekly hours edged up from 34.5 to 34.6 as average hourly earnings jumped 0.5% (consensus: 0.3%).

"Overall, this mixed report is another reason to suspect that the Fed will stand pat until at least the middle of this year while it waits to see how economic conditions develop," wrote Paul Ashworth, chief US economist at Capital Economics, immediately following the data.

German manufacturing orders fell more than expected in December.

Orders were down 0.7% month-on-month in December compared with a 1.5% increase in November and steeper than the 0.5% drop expected by economists.

On the year, manufacturing orders were down 2.7%.

Domestic orders decreased 2.5% while foreign orders slipped 0.6% on the previous month.

New orders from the euro area were down 6.9% from November and orders from other countries increased 5.5%.

Pantheon Macroeconomics said the figures were poor but the jump in export orders was upbeat.

“A disappointing headline, indicating German manufacturing continues to struggle,” it said.

Oil prices were mixed, with West Texas Intermediate off 0.9% at $31.45 a barrel and Brent crude higher by 0.2% at $34.55.

In corporate news, BG shares edged higher after the oil and gas company posted a drop in full year profit but a rise in production.

Stock in French lender BNP Paribas rose 1.46%. Although the company posted a big drop in fourth quarter earnings, investors appeared to be welcoming plans to overhaul the investment bank and cut costs.

ArcelorMittal tumbled after the steelmaker announced a large fourth quarter loss and said it will issue $3bn of shares to strengthen its balance sheet.