Profit-taking, US jobs report assail European markets

European stock exchanges retreated on Friday in the face of profit-taking and on prospects for continued monetary tightening in the US following a stronger-than-expected job creation report.

In London the FTSE 100 index slipped 0.02 percent to 5,314.7 while in Paris the CAC 40 fell 0.84 percent to close at 4,421.70. The Frankfurt DAX shed 0.96 percent to end the week at 4,827.18.

The Euro STOXX 50 index of leading eurozone shares fell 0.91 percent to reach 3,280.49.

On the currency market the US dollar rose against the euro on Friday after a monthly report from the US Labor Department showed that the US economy had created more jobs than expected last month.

Data from the Labor Department showed that the US economy had created 207,000 new jobs in July, significantly more than the 180,000 forecast by analysts.

Wall Street turned lower after the stronger-than-expected US jobs growth in July suggested the Federal Reserve would maintain its policy of hiking interest rates, brokers said.

In mid-morning trade, the blue-chip Dow Jones Industrial Average was 0.28 percent lower at 10,580.65, while the tech-laden NASDAQ Composite was down 0.40 percent at 2,182.62.

"It's good news on the job market front and this should mean strong equity prices going forward. But the slightly higher labour costs could put a lid on today's trading," SW Bach chief market analyst Peter Cardillo said.

"With oil going up and labour costs a little bit higher, traders could begin to contemplate a more hawkish Fed and a 50-basis-point rise somewhere along the line before they end their tightening cycle," he said.

The US central bank is universally expected to raise its benchmark interest rate by another quarter percentage point to 3.5 percent when its policymaking arm meets next Tuesday.

In London, Barclays, the UK's third largest bank, sustained sentiment, rising 3.04 percent to ?5.76 after announcing better-than-expected first half results.

Marketing specialist Aegis jumped 9.63 percent to ?1.2525 on speculation that French advertising giant Havas may be contemplating a merger proposal.

British Airways meanwhile suffered a bout of profit-taking and fell 1.55 percent to ?2.86.

In Paris tire maker Michelin gained 1.92 percent to close at 53 euros after it announced strong first half net earnings that compensated for a rise in raw materials prices.

Engineering group Saint-Gobain gave up 1.27 percent to finish at 49.12 euros two days after announcing a hostile takeover bid for British plasterboard maker BPB.

In Frankfurt automaker BMW fell 1.05 percent to 36.74 euros after Dresdner Kleinwort Wasserstein lowered its recommendation on the share following the publication of disappointing financial results.

Elsewhere there were declines of 0.50 percent to 33,335 on the SP/MIB in Milan, 0.85 percent to 391.31 on the AEX in Amsterdam, 0.22 percent to 3,249.45 on the BEL-20 in Brussels, 0.29 percent to 10,045.4 on the IBEX-35 in Madrid and 0.14 percent to 6,607.69 on the Swiss Market Index.