European stock markets edged lower on Tuesday, giving back some of the strong gains recorded in the previous session, as investors adopted a cautious stance ahead of key U.S. employment data.
The pan-European STOXX 600 slipped 0.1% to 581.87 by mid-morning trading, after posting its largest single-day advance in nearly three weeks on Monday.
Major regional indexes also moved lower. Germany’s benchmark index fell around 0.5%, while French shares eased roughly 0.1%, reflecting broad-based caution across the region.
U.S. jobs data in focus
Investor attention turned to the upcoming U.S. employment reports for October and November, which mark the first major economic releases of the week and could influence expectations for Federal Reserve policy in the year ahead.
Markets are closely watching for signals on the future path of interest rates, particularly after the Fed’s meeting on Wednesday. The central bank’s comments were seen as less hawkish than expected, strengthening hopes that further rate cuts could follow next year.
Defence and tech stocks drag on markets
European defence stocks came under pressure after the United States offered NATO-style security guarantees for Kyiv and European officials reported progress in peace talks aimed at ending the war in Ukraine.
Shares of Rheinmetall dropped 4.3%, Hensoldt declined 4%, and Leonardo fell 3.4%. The broader defence sector index slid 1.9%, marking its steepest daily fall in more than two weeks.
Technology stocks also weighed on the broader market. Chipmaker ASML lost 2%, while software giant SAP fell 1.7%, adding to overall downside pressure.
Banks provide some support
In contrast, bank shares continued to advance, rising about 0.3%. UBS outperformed the sector, climbing 1.6% after Bank of America Global Research upgraded the stock to “buy” from “neutral.”
