World stocks tepid ahead of key US jobs data

Global stock markets were in wait-and-see mode Thursday, a day ahead of the release of key US jobs data that could strengthen the case for a US interest rate hike.

Shares in London fell as sterling rallied after figures showed Britain's manufacturing activity hit a 10-month high in August, rebounding strongly from a slump triggered by the country's vote in favour of exiting the European Union.

A stronger pound tends to hurt London's benchmark FTSE 100 index as its composition is made up of companies exporting worldwide.

"The FTSE is underperforming... driven by a combination of a stronger pound and further downside pressure on commodities," said Craig Erlam, senior market analyst at Oanda trading group.

In the eurozone, Frankfurt's DAX dipped, while the CAC in Paris was flat.

US stocks also slid in early trade after data showed a surprise contraction in the US manufacturing sector in August.

Also hurting sentiment was a warning from the International Monetary Fund that the global economy risks sinking into a "low-growth trap" if leading economies do not do more to boost activity.

"Domestic stocks are lower on the heels of a disappointing US manufacturing report that followed some relatively upbeat reports from the sector in Europe and China," analysts at Charles Schwab said in a note to investors.

"Caution remains ahead of tomorrow's key August US nonfarm payroll report," they added.

A strong August reading for jobs creation could endorse the view of solid US economic growth and push the US Federal Reserve to raise interest rates as soon as the end of this month.

- Eurozone 'less perky' -

Britain's manufacturing activity hit a 10-month high in August, with the PMI hitting 53.3, up from 48.3 in July which was a 41-month low.

Analysts' consensus forecast had been for a reading of 49 in August, just below the 50 mark that indicates growth.

Separate Markit data revealed a contraction for the eurozone's manufacturing PMI.

"Over in the eurozone the manufacturing situation wasn't as perky, the region-wide reading unexpectedly slipping to a three-month low of 51.7," noted Spreadex analyst Connor Campbell.

Oil prices weakened further, with sentiment weighed down by a sharp rise in US crude stockpiles, dealers said.

US benchmark West Texas Intermediate for October delivery fell to $43.45 a barrel.

Brent North Sea crude for November delivery was down at $45.67 a barrel compared with Wednesday's close.

- Mixed Asia trading -

In Asia, indices were mixed after a surprise pick-up in Chinese factory activity that indicated stability in the world's number two economy -- but fuelled fears that authorities would hold off from introducing fresh stimulus.

Trading was cagey across the region following oil-linked losses in New York and ahead of Friday's US jobs report.

Beijing said its purchasing managers index of manufacturing activity hit 50.4 last month, its highest level since October 2014 and suggesting the economy is stabilising following a series of policy tweaks aimed at kick-starting growth.

China's economy is growing at its slowest rate for a quarter of a century.

- Key figures around 1550GMT -

London - FTSE 100: DOWN 0.5 percent at 6,745.97 points (close)

Frankfurt - DAX 30: DOWN 0.55 percent at 10,534.31 (close)

Paris - CAC 40: UP 0.03 percent at 4,439.67 points (close)

EURO STOXX 50: DOWN 0.3 percent at 3,014.31 points (close)

New York - DOW: DOWN 0.4 percent at 18,319.49

Tokyo - Nikkei 225: UP 0.2 percent at 16,926.84 (close)

Shanghai - Composite: DOWN 0.7 percent at 3,063.31 (close)

Hong Kong - Hang Seng: UP 0.8 percent at 23,162.34 (close)

Euro/dollar: UP at $1.1195 from $1.1156 late Wednesday

Dollar/yen: DOWN at 103.17 yen from 103.43 yen

Pound/dollar: UP at $1.3283 from $1.3128