European stock markets rebounded slightly on Friday before key US payrolls data, after the previous session's sharp losses driven by interest rate hikes and banking sector woes.

Sentiment was partly boosted after US tech titan Apple said first-quarter iPhone sales and services revenue beat forecasts, capping a successful earnings season for the sector.

Yet Asia diverged after a Wall Street slump on Thursday on renewed US banking fears and this week's quarter-point rate hikes from the European Central Bank and the US Federal Reserve, who are seeking to tackle stubbornly high inflation.

The dollar wavered before April's US non-farm payrolls (NFP) data, which will give clues over the health of the world's biggest economy and the next step for the Fed.

Data watch

"With the Fed shifting toward a likely pause in interest rates, the monthly jobs report takes on a different significance," said Forex.com analyst Matthew Weller. "Now, instead of looking for a reading that's good enough to keep the Fed raising interest rates, traders will be shifting their focus to watch out for data that is bad enough to prompt rate cuts."

Investors are also pondering whether the ongoing US banking rout will convince the Fed to begin cutting interest rates sooner than planned.

Zaye Capital Markets analyst Naeem Aslam cautioned however that traders were "unlikely" to place any big bets ahead of the key data.

Wall Street had finished sharply down thanks to jangled nerves over mid-size US banks.

Shares in regional US lenders plunged on Thursday, with PacWest plummeting 50.6 per cent, Western Alliance slumping 38.5 per cent and First Horizon losing 33.6 per cent amid lingering fears for the health of the sector. Short-selling was making matters worse.

But in after-hours trade on Friday, PacWest was up 19 per cent from Thursday's close, Western Alliance was up 14 per cent and First Horizon gained seven.

Thursday's sell-off in PacWest had been exacerbated by media reports saying the bank was considering the possibility of a sale or other capital-raising measures in the wake of the recent collapse of other mid-sized lenders.

The bank sought to assure investors it had not "experienced out-of-the-ordinary deposit flows", and that its "cash and available liquidity remains solid", but fears continued to fester.

"Traders are largely worried about the ongoing banking crisis in the US, and for them, it is difficult to see where the end of the road is," warned Aslam.

Traders are largely worried about the ongoing banking crisis in the US, and for them, it is difficult to see where the end of the road is- Zaye Capital Markets analyst Naeem Aslam

Back in Asia, Hong Kong stocks finished half a per cent higher after paring early gains, with tech and property companies among the big winners.

Shanghai, however, shed nearly half a percent as fears of China's uneven recovery set in and a less-than-stellar earnings season failed to impress.