Europe open: Shares slip on US data, Shell lower after gas trading warning

European shares opened slightly lower on Friday after a heavy sell-off in the previous session.

The pan-European Stoxx 600 index was down 0.26% in early trade after falls overnight in the US and Asia. All major regional bourses were in the red.

Strong US jobs data prompted 2-year Treasury yields to hit a 16-year high as traders started to bet on the Federal Reserve lifting interest rates again.

"Global stock markets have entered the end of the week with renewed nervousness. The FTSE 100 fell 2.2% on Thursday, while there were declines of 0.8% on both the S&P 500 and Nasdaq," said Hargreaves Lansdown analyst Sophie Lund-Yates.

"The sell-off has been triggered by data showing the private sector in the US added around double the number of jobs economists expected last month. The addition of just under half a million roles has heaped fuel on the interest rate fire, with such strong data an indication that the economy will need a heavier hand if inflation is to be brought under control," she said.

"Attention now turns to the official non-farm payrolls data in the US, due later today. This could slightly contradict the private sector numbers, with economists predicting that the US added 200,000 jobs last month, down from 339,000 in May."

"Should this be the case, it would still be indicative of a tight market, and median estimates have underestimated the monthly data for over a year. Early trading indicators show US investors are braced for challenging news."

In economic news, German May industrial production fell by more than expected in a further sign that a key sector of Europe's biggest economy was stagnating.

Industrial production fell by 0.2% month-on-month, and from expectations of a 0.1% fall. On a yearly basis industrial production was up by 0.7% but still 5% below pre-Covid pandemic levels.

On the equities front, Shell shares were lower after the oil and gas giant said it expected second-quarter gas trading results to be "significantly lower" than in the previous quarter. The world's biggest liquefied natural gas (LNG) trader also flagged $3bn in writedowns for the quarter.

Reporting by Frank Prenesti for Sharecast.com