Caution reigned on most stock markets yesterday as traders reacted to mixed regional data ahead of key US jobs numbers due later in the week.
Wall Street stocks were trading modestly lower after the ADP payrolls firm said yesterday that US businesses added a solid 177,000 new staff in July.
Analysts said the ADP data supports the consensus forecast that the Labor Department will report a 180,000 gain in public and private sector payrolls tomorrow, down from 255,000 the previous month but still seen as strong.
Markets believe a good jobs report may be key in convincing the Federal Reserve that the US economy is ready to handle another hike in interest rates, possibly as soon as in September.
London’s benchmark FTSE 100 index ended the day 0.6% lower, with falling oil prices hitting energy shares and commodities companies tumbling under pressure on the prospect of a US interest rate hike, which would likely raise the value of the dollar and hurt trading in dollar-denominated materials.
In the eurozone, Frankfurt’s DAX 30 shed 0.6% at 10,592.69.
“Both German retail sales and employment data came in better than expected, however their impact on the markets should be only temporary as they will neither herald a change in direction by the ECB nor indicate a major acceleration in economic activity,” said Markus Huber, a trader at City of London markets.
Eurozone inflation and jobless levels have fallen short of analyst forecasts, official data showed yesterday, amid speculation that the European Central Bank will have to adopt more stimulus measures.
The official EU statistics agency Eurostat said eurozone consumer prices rose 0.2% in August, the same rate as in July.
Eurozone unemployment meanwhile was unchanged at 10.1% in July.
The DAX dipped despite a spike in banking shares on a rumour, quickly denied, that market leader Deutsche bank would gobble up its main competitor Commerzbank.
Deutsche Bank shares, which have lost half their value in the past year as the bank struggles to restructure itself and fend off lawsuits, shot up 2.5% nevertheless.
Shares in Commerzbank jumped 3.4%.
In Paris the CAC 40 had held in positive territory most of the day, buoyed by positive results from two of its top telecoms firms Iliad, whose shares shot up more than% and Bouygues, which gained 1.1%. 
However it was dragged down as the day went on, closing 0.4% lower.
In foreign exchange yesterday, the euro was steady against the dollar, which however fell versus the British pound.
Analysts pointed to data showing a recovery in British consumer confidence following a post-Brexit vote slump as handing a boost to sterling.