Investor Caution Flattens European Markets

By Josie Cox and Tommy Stubbington 

        European stocks opened Friday on a cautious note, with fresh escalations in Ukraine and U.S. jobs data later in the session keeping investors guarded.
        The euro Stoxx 600 was little-changed midmorning.
        Pro-Russian militants in the rebel stronghold of Slovyansk said Friday that Ukraine has launched a "large-scale operation" to regain control of the city. Separatist leaders told Russian state media that Ukrainian authorities had surrounded the city and attacked various checkpoints leading into the city using helicopter gunships.
        The impact on markets, however, remained fairly muted. Moscow's MICEX stock index was down 0.6%, while the ruble weakened 0.6% against the dollar. Safe retreats in financial markets that usually perform well in outbreaks of geopolitical stress, such as gold, the Swiss franc, and the yen, were steady.
        Elsewhere in Europe, Germany's DAX was little-changed and France's CAC-40 lost 0.3%. The UK's FTSE 100 was up 0.1%.
        Purchasing managers' data showing eurozone factory activity in April expanded at a faster pace than first estimated lent some support to markets.
        "The main reason for people to worry about Ukraine would be if what's happening there were to affect growth in Europe, and that really doesn't seem to be the case," Gareth Evans, head of European equity strategy at Deutsche Bank, said.
        "PMI data has been very positive and the latest ECB lending survey very strong too. If that carries on economists are going to start raising their growth forecasts."
        Elsewhere, all eyes Friday will be centered on the monthly jobs report from the U.S., at the end of what data earlier in the week showed was the second-worst quarter for economic growth since the recession ended in mid-2009.
        U.S. stock futures were little-changed ahead of the data, with the S&P 500 indicated to open 0.1% higher. Changes in futures don't necessarily accurately predict market moves after the opening bell.
        The consensus estimate for Friday's nonfarm payroll figure stands at 215,000. That would trump March's 192,000 number, and mark the strongest month since mid-2010 when temporary U.S. Census hiring boosted job totals.
        "This is a really important release," said Steven Saywell, global head of foreign-exchange strategy at BNP Paribas.
        "The first quarter was a disaster for growth in the U.S. and Wednesday's GDP figure only supported that. The real question now is whether this is a start of sustained weakness for the year or whether we will see strong acceleration in the second quarter."
        Currency markets were largely quiet, although the dollar strengthened slightly ahead of the jobs report. The greenback was up 0.2% against the yen at Y102.47.
        Back in Europe, shares in Royal Bank of Scotland sailed to the top of the index, after the lender reported a surge in net profit in the first quarter of the year, with results boosted by a series of one-off gains and a big fall in impairments at its struggling Irish division.
        Pfizer and AstraZeneca overnight resumed talks about a trans-Atlantic merger after Pfizer sweetened the terms of an earlier takeover offer for its British rival, according to people familiar with the matter.
        The terms of the informal offer from New York-based Pfizer couldn't be learned. Its earlier approach, which was rejected, valued AstraZeneca at nearly $100 billion.
        French stocks lagged behind wider Europe, with BNP Paribas shares weighing following a downgrade from Credit Suisse to neutral from outperform.
        In commodities markets, gold was 0.1% lower at $1,284.20 an ounce, and Brent crude was up 0.7% at $108.55 a barrel.
        Write to Josie Cox at josie.cox@wsj.com and Tommy Stubbington at tommy.stubbington@wsj.com
        (END) Dow Jones Newswires

        May 02, 2014 05:44 ET (09:44 GMT)