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European Shares Falter as Traders Eye U.S. Jobs Data, OPEC+ Output Cut

By Scott Kanowsky -- European shares edged lower on Thursday, paring back early gains, after stocks in the U.S. fell following fresh job market numbers and a deep output cut by the OPEC+ group of producer nations.

By 07:08 ET (11:08GMT), the pan-European STOXX 600 fell by 0.35%, the DAX in Germany traded 0.24% in the red, the CAC 40 in France inched down by 0.44%, and the U.K.'s FTSE 100 was 0.59% lower.

The Organization of Petroleum Exporting Countries and its allies, which include Russia, agreed on Wednesday to slash production by 2 million barrels a day in a bid to support flagging oil prices. However, worries remain that the decision could pour further fuel onto red-hot global inflation.

Oil prices are subsequently hovering near a three-week high, with Brent Oil Futures for December moving up 0.07% to $93.44. Crude Oil WTI Futures are largely unchanged, trading at $87.77.

Stocks on Wall Street, as well as U.S. government bonds, fell in the wake of the OPEC+ announcement, halting a strong two-day rally seen earlier in the week. Also weighing on sentiment on Wall Street was new data showing resilient demand in the American labor market, which stoked concerns that the Federal Reserve will keep interest rates higher for a longer period of time.

Focus now turns to upcoming U.S. jobs data to help determine the path forward for monetary policy. Signs of labor market strength in Friday's key nonfarm payrolls report are expected to give the Fed impetus to continue aggressively tightening monetary policy, which would likely be a negative signal for risk-driven assets.

Meanwhile, fresh factory orders numbers out of Germany have led to additional concerns about the health of Europe's largest economy. Incoming orders in the country's crucial manufacturing sector slid by 2.4% between July and August, according to the Federal Statistics Office, due in part to the war in Ukraine and COVID-19 restrictions hitting supply chains. Analysts had expected a decline of 0.7%.

In corporate news, oil major Shell PLC (LON:SHEL) warned that third-quarter profits will be negatively impacted by a drop in refining margins and weak results from natural gas trading. Shares in Shell fell to near the bottom of the STOXX 600.

Merck KGaA (ETR:MRCG) also announced that it would start the process of looking into larger takeover deals in 2023. Shares in the German healthcare and chemicals group edged higher.

Elsewhere, gold futures rose by 0.20% to $1,724.20/oz, while EUR/USD exchanged hands at $0.9886.

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