Europe midday: Stocks deeper into the red ahead of US jobs report

European stocks extended their losses even further by midday on Friday as retreating commodities prices, gloomy Japanese data and pre-jobs reports jitters outweighed largely encouraging European manufacturing data.

Nevertheless, not long after noon the Stoxx 600 was down 1.83% at 331.37 points, with individual country benchmarks all in the red too.

Germany's Dax was down 2.1%, France's CAC 40 down 1.9%, Spain's IBEX down 1.04% and Italy's MIB also 1.04% lower.

Oil prices continued to slide on concerns about a supply glut. Brent crude fell 2.02% to $39.51 per barrel and West Texas Intermediate dropped 2.4% to $37.44 per barrel at 1147 BST.

The euro-dollar rose above 1.1412 to a fresh five-month high ahead of the afternoon's all-important US non-farm payroll report, with some analysts saying even more is at stake than usual.

March's report, which follows a reasonably solid ADP number earlier this week, is forecast to see a slight fall to 206,000, from February’s 242,000.

Michael Every at Rabobank said that given that this month’s jobs data will come just a few days after Janet Yellen effectively made it clear that US rates can only go up "in circumstances that are actually impossible to achieve", it puts even more importance on the NFP reading. is even more at stake here.

"We may need to reach beyond the mere superlatives for the kind of super-hero noise when a mighty punch is landed on an over-muscled man or robot usually wearing skin-tight lycra: “KER-THUMMMMP!” or “KROKKKKKK!”, or such-like," Every said.

"Just imagine, for example, if we get a huge beat of the consensus 205K figure, or another surprise spike in average hourly earnings – the USD may not spike, but the US curve may steepen quite aggressively given that Janet is sitting hard on the short end."

"Equally, imagine if we get a very weak number when the Fed Chair is already flagging less interest in rate hikes. How low will yields sink if we see a number that suggests the US economy is weakening? And how would EUR and JPY react on that basis?"

Also moving markets in the morning session were notable declines in both Brent Crude and copper prices, while Europe's stock declines followed a mainly red session in Asia and a slightly negative finish in the US overnight.

Manufacturing PMIs

Chinese stocks were on the up after a surprise jump in manufacturing data for the first time in eight months, though weak Japanese industrial numbers put a dampener on much of this sentiment.

Japanese equities tumbled after the Tankan Survey showed business sentiment among the nation's big manufacturers fell to the lowest in nearly three years in the first quarter.
The headline index stood at +6 in March, half the level seen three months ago and worse than a median market forecast of +8.

European PMIs also mostly proivided upside, though it seemed to be mostly overlooked by markets, with a raft of mostly positive final revisions to manufacturing data from around the continent.

For the Eurozone as a whole, purchasing managers' index for the manufacturing sector from Markit came in at 51.6 for March, above the consensus estimate of 51.4 and the previous month's 51.4.
Germany's manufacturing PMI printed at 50.7, above the 50.4 forecast and the 50.4 previously.
UK manufacturing activity expanded less than expected, as output growth remained unchanged from February’s seven-month low, with the PMI coming in at 51.0, up slightly from February’s 34-month low of 50.8. Analysts had forecast a reading of 51.2.

France's 49.6 figure was in line with predictions and flat on the prior month, though the Spanish print of 53.4 was short of the 54.0 estimate and down from February's 54.1.

Italian PMI at 53.5 was ahead of estimates of 52.5 and up from 52.2 a month ago, with Swiss, Greek and Irish numbers also ahead of forecast.

Meanwhile, the European Central Bank’s newly expanded bond-buying regime will begin to take effect on Friday as it renews the battle against deflation, with settlement of €80bn euros a month of purchases; a third more than the ECB was previously spending.