European stocks were lower Friday, with rate-hike fears offsetting the boost provided by bid talk among UK retailers.
Subdued trading volumes were a feature across most of Europe as traders steered clear of adopting aggressive positions before the long weekend.
"Next week will be an extremely busy one in terms of economic data released around the world. The most important release of the week, however, will be US labor market data for May on Friday," said Simon Rubinsohn, economist at Gerrard.
Most market players expected to see nervous trading ahead of the crucial data, which is likely to throw light on the timing and extent of US monetary tightening.
At 4pm, the Dow Jones Stoxx 600 Index, which tracks Europe's 600 largest listed companies, was down 0.4 percent at 236.86. The Dow Jones Euro Stoxx Index, which tracks companies in countries that joined the common currency, was 0.3 percent lower at 223.06.
The May reading of the Chicago Purchasing Managers Index surprised analysts Friday, coming in at 68.0, greatly exceeding market expectations of a 62.0 reading.
Ken Wattret, European economist at BNP Paribas, said: "The data reinforces already strong expectations of a June US interest rate hike." He added that weak Michigan consumer confidence data published Friday also makes it difficult to be optimistic about stocks.
The final May Michigan consumer sentiment data came in at 92.0 versus expectations of a 94.2 reading.
"All eyes are now on next week's data," he said. In London, shares in Marks & Spencer built on the previous session's 19 percent gains after it was revealed that retail entrepreneur Philip Green was preparing a bid for the UK's largest clothing retailer. Shares were up 4.2 percent at £3.595.
Market speculation continued over details of the anticipated bid.
Other UK retailers buoyed by bid speculation included UK food company Geest. Shares ended up 14.0 percent at 585 pence after an aggressive buyer emerged, sparking intense bid speculation in afternoon trade.
UK clothing retailer Next lost 1.7 percent to £13.86 on concerns it would face more competition from a revived M&S.
"Corporate activity has been bubbling under the surface of the market for a while without making an impact on the major indexes," commented analysts at Barclays Private Clients.
"A bid with a large cash element for a FTSE-100 stock may be altogether more significant," they said. A fresh wave of speculation swirled around Fiat Friday after the sudden death of Chairman Umberto Agnelli loosened the grip of the family on the Italian industrial conglomerate. Shares rose 1.9 percent to US$7.05.
Energy stocks were lower amid news that Organization of Petroleum Exporting Countries is mulling a compromise move to suspend a self-imposed oil output ceiling. The oil cartel meets next Thursday in Beirut.
At the close, London's FTSE-100 Share Index was down 0.5 percent at 4430.7, while in Paris the CAC-40 Index was down 0.7 percent at 3652.03. Frankfurt's Xetra Dax Index was down 0.3 percent at 3902.72.
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