Europe open: Stocks edge higher as investors eye payrolls

European stocks edged higher in early trade as investors eyed the release of the all-important non-farm payrolls report and mulled over a surprise tightening of monetary policy by the People’s Bank of China.

At 0835 GMT, the benchmark Stoxx Europe 600 index was up 0.5%, Germany’s DAX was up 0.2% and France’s CAC 40 was 0.6% firmer.

Investors were digesting news that China has unexpectedly lifted short-term interest rates. The PBOC raised reverse repurchase agreements by ten basis points to 2.35%.

Sticking with China, the Caixin manufacturing purchasing managers' index, a private gauge of factory activity, nudged down to 51.0 in January from 51.9 in December. This was below economists’ forecasts of 51.2, but remained out of contraction territory for a seventh straight month.

The figures weighed on basic resources, which are heavily dependent on demand from China, pushing the Stoxx 600 sub-index for the sector down 1.5%.

The main focus on Friday will be the US non-farm payrolls report and unemployment rate at 1330 GMT, but investors will also keep an eye out for Markit’s eurozone services purchasing managers’ index at 0900 GMT and retail sales for the bloc at 1000 GMT.

David Morrison, senior market strategist at SpreadCo, said: “It’s been an uneventful start to the morning’s trade although all the European indices and most of the US stock index futures were trading in positive territory first thing. Non-farm payrolls for January are released later today. The consensus expectation is for an increase of around 170,000 which would be a solid improvement on December’s 156,000. If the number comes in as expected it would keep the 6-month average above 160k which is fine as far as most analysts, investors and traders are concerned.

“Wednesday’s ADP private sector survey showed an increase of 246,000 jobs, way above both the 151,000 from the prior month and the 165,000 expected. ADP is a fairly poor predictor when it comes to the government’s NFP number, but it can often give a ‘heads-up’ to an upside, or downside, surprise.”

In corporate news, Banco Popular tumbled after reporting a worse-than-expected yearly loss of €3.5bn on the back of extraordinary provisions and one-off charges to clean up its balance sheet.

German retailer Metro ticked higher despite posting a drop in first-quarter net profit.

Residential repair and improvements business HomeServe gained as it said it has acquired shareholdings in Checkatrade in the UK and Habitissimo in Spain. The FTSE 250 company purchased a 40% interest in Checkatrade, and a 70% interest in Habitissimo, with the deals being worth a combined £37m.

Insurer Beazley surged after reporting a 3% jump in full-year profit as gross premiums written increased 6% and the company lifted its dividend.

Budget airline Ryanair flew higher as it said traffic in January rose 17% to 8.77m, while the load factor – which gauges how full the planes are – nudged up to 90% form 88%.