Europe open: Stocks edge lower ahead of non-farm payrolls report

European stocks edged lower in early trade as investors digested some disappointing German data and adopted a cautious stance ahead of the eagerly-awaited non-farm payrolls report.

At 0900 GMT, the benchmark Stoxx Europe 600 index was down 0.5%, France’s CAC 40 was down 0.7% and Germany’s DAX was 0.2% lower.

“European equities are trading slightly lower this morning with traders seeing more consolidation ahead of this afternoon’s crucial US non-farm payrolls data,” said Markus Huber, senior analyst at Peregrine & Black.

“Also keeping traders sidelined for now is the overall lack of major market moving news overnight which basically leads to European stock indices pretty much mirroring their US peers for now.”

Societe Generale said the average non-farm payroll gain in the previous six reports was 199,000, and in the past twelve reports was 229,000.

“The current consensus expectation for the October non-farm payrolls is 180,000 with the unemployment rate at 5.1%. A report with a headline number around 200K is likely to raise market pricing of a December rate hike,” the bank said.

Investors will be particularly keen to see how the October payrolls report comes in after Federal Reserve Chairwoman Janet Yellen’s hawkish comments on Wednesday.

Yellen said before the House financial services committee that the US economy was performing well and a rate hike next month was still a “live possibility”.

"The committee does feel that moving in a timely fashion if the data and outlook justify such a move is a prudent thing to do because we will be able to move at a more gradual and measured pace," Yellen said.

Some bad news on the macroeconomic front also put a downer on the mood.

Figures released by Destatis earlier showed German industrial output fell by 1.1% month-on-month on a seasonally-adjusted basis in September. This marked the sharpest drop in over a year and fell well short of expectations for a 0.5% increase.

In corporate news, German insurer Allianz slumped after reporting a bigger-than-expected 15% drop in third-quarter net profit.

BHP Billiton was under the cosh after a dam burst at an iron ore mine in Brazil part-owned by the company, leaving at least 15 people dead and almost 50 missing.

On the upside, Swiss agribusiness Syngenta surged on reports it was in discussions over a combination with DuPont’s agricultural division.

Inmarsat was in the black after the satellite telecommunications service provider posted a jump in third-quarter profit.

The payrolls report is at 1330 GMT, along with the unemployment rate.