Europe open: Stocks edge lower as investors eye non-farm payrolls

European stocks edged lower in early trade, with investors erring on the side of caution ahead of the all-important non-farm payrolls report.

At 0855 GMT, the benchmark Stoxx Europe 600 index was down 0.5%, Germany’s DAX was 0.6% weaker and France’s CAC 40 was off 0.1%.

“There certainly seems to be some anxiety on the FOMC about a tightening of monetary conditions, the effect of a strong US dollar, and the slowdown in global growth prospects, and this could well keep the Fed on the side-lines in the short and medium term,” said Michael Hewson, chief market analyst at CMC Markets.

“For most of last year all the market was able to focus on was the US jobs report to the exclusion to all else and while today’s January jobs report is also likely to be the main event, it would need to be a spectacularly good number now to shift market expectations about the slowly receding possibility of an imminent rate rise.”

Oil prices were weaker, with West Texas Intermediate down 0.9% at $31.44 a barrel and Brent crude down 1.3% at $34.02.

In corporate news, BG shares were little changed in early trade after the oil and gas company posted a drop in full year profit but a rise in production.

French lender BNP Paribas rallied. 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.

Figures released earlier by Destatis showed German manufacturing orders fell more than expected in December.

Orders were down 0.7% 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.

Still to come, payrolls are at 1330 GMT, along with the unemployment rate and trade balance figures.

Societe Generale expects the payrolls report to show another solid increase in job creation. It forecasts a 245,000 rise compared with consensus of 190,000, and a further decline in the unemployment rate to 4.9%.