European shares end lower on weak US jobs growth

European equity markets closed weaker yesterday after disappointing jobs data in the United States fuelled growth worries, and as oil prices ticked up.

Losses on Wall Street, which was hit by weaker-than-expected jobs growth and soft services sector data for May, also took a toll on the market.

The FTSEurofirst 300 blue chip index ended 0.2 per cent lower at 1,117.8 points. The index is still up 1.5 per cent this week and racked up its third straight week of gains after hitting new three-year highs.

The narrower DJ Euro Stoxx 50 index fell 0.5 per cent yesterday to 3,114.3 points.

Among the losers, Finnish energy group Fortum fell nearly two per cent to €12.2, weighed by the sale of a 7.2 per cent stake in its shares by the Finnish government. Fortum's shares had hit a record high of €12.64 this week.

The insurance sector index fell from near two-month highs and lost 0.7 per cent as falling government bond yields triggered concerns on insurers' investment incomes, traders said.

Switzerland's largest insurer Zurich Financial lost 1.5 per cent and Dutch Aegon fell 1.2 per cent.

US employers added only 78,000 workers to their payrolls last month, the weakest job growth in 21 months, according to government data.

The disappointing job growth - less than half what analysts had forecast - however meant that the Federal Reserve could be near the end of its year-long credit tightening cycle, but equity markets still took a hit.

"It is on the soft side yet confirms the US labour market is still improving but is suffering a bit because of a slowdown triggered by higher oil prices," said Holger Schmieding, economist at Bank of America.

Around Europe, London's FTSE 100 index closed 0.1 per cent lower, Paris' CAC-40 fell 0.5 per cent and Frankfurt's DAX lost 0.5 per cent. In Zurich, the SMI eased 0.3 per cent.

Technology groups such as mobile phone maker Nokia and chip maker STMicroelectronics gave up early gains and ended lower.

The technology sector was the best performer in Europe earlier in the day, boosted by bullish comments on Thursday from chip heavyweight Intel Corporation.

Fund managers are upbeat on European equities, which have risen about seven per cent so far this year.

F&C Asset Management remains "overweight" European equities, seeing valuations as attractive compared with other asset classes such as bonds and cash, and against other regions.

"But in an environment of slowing growth and rising interest rates globally, it's still appropriate to have a slightly defensive bias to the portfolio," F&C Asset Management's head of strategy Paul Niven said, preferring large-cap companies over small and mid-caps.

Also hitting stocks yesterday were oil prices, which rose on concerns over tightening supplies of heating oil, partly reversing the previous session's slide of more than a dollar.