Dec 16 (Reuters) – European shares drifted lower on Tuesday, pulling back after robust gains in the previous session, while investor caution ahead of crucial U.S. jobs data added to the dour mood.
The pan-European STOXX 600 was down 0.1% at 581.87 as of 0811 GMT, after marking its biggest one-day gain in close to three weeks on Monday.
Major regional bourses were broadly lower with ones in Germany and France down 0.5% and 0.1%, respectively.
Investors turned cautious ahead of the October and November U.S. employment reports, the first significant economic indicators this week that could shape expectations for Federal Reserve monetary policy in the upcoming year.
Market participants are particularly attentive to any clues on the future of interest rates following the Fed’s Wednesday meeting where the central bank’s commentary was viewed as less hawkish than anticipated, bolstering expectations for further rate reductions next year.
Meanwhile, the U.S. offered to provide NATO-style security guarantees for Kyiv and European negotiators reported progress in talks on Monday to end Russia’s war in Ukraine, weighing on defence stocks.
Rheinmetall fell 4.3%, Hensoldt was off 4%, Leonardo shed 3.4% and the broader index was down 1.9%, set for its biggest one-day decline in more thsn two weeks.
Technology stocks also weighed on the index, with heavyweights ASML down 2% and SAP off 1.7%.
Banks continued to gain, up 0.3%. UBS was up 1.6% after BofA Global Research upgraded its stock to “buy” from “neutral”.
(Reporting by Ragini Mathur in Bengaluru; Editing by Mrigank Dhaniwala)
