European shares steady ahead of key US jobs data

By Purvi Agarwal and Sanchayaita Roy

June 6 (Reuters) - European shares were stable on Friday, as investors refrained from placing major bets ahead of crucial U.S. jobs data, with persistent trade tensions adding to the uncertainty.

The pan-European STOXX 600 .STOXX held its ground at 551.95 points, as of 0809 GMT, and remained on track for a second consecutive weekly gain, if momentum holds.

A monthly reading of U.S. non-farm payrolls will set the tone for the day, helping investors gauge the impact of U.S. President Donald Trump's trade policies on the labor market and how the Federal Reserve might navigate this uncertain trade environment.

"As the Fed is looking for hard data on the impact of tariffs on the labour markets, a print above consensus could reinforce the Fed's cautious stance and serve as a bearish impetus," Commerzbank analysts said.

Trump doubled tariffs on steel and aluminium imports earlier this week, intensifying trade tensions.

However, investors remained optimistic on signs of a potential easing of U.S.-China tariff tensions following Trump's phone call with Chinese President Xi Jinping on Thursday.

Also on Thursday, German Chancellor Friedrich Merz said that Germany and the U.S. aim to strengthen trade ties, without offering any details.

Meanwhile, the ECB's anticipated interest rate cut was largely overshadowed by President Christine Lagarde's signals that the central bank is approaching the end of its easing cycle, prompting investors to scale back expectations for further cuts.

Investor focus will be on whether a public feud between Trump and Tesla top boss Elon Musk could have wider consequences for markets.

"Comments from Musk yesterday about Trump tariffs, putting the U.S. in recession in the second half of this year combined with weak data this week is causing investors to sit out for the time-being," said Fiona Cincotta, senior market analyst at City Index.

In the market, heavyweight healthcare .SXDP and energy .SXEP shares countered declines in industrial goods and services .SXNP and miners .SXPP.

Among stocks, sportswear retailers Adidas ADSGn.DE and Puma PUMG.DE slipped 0.6% and 1.4%, respectively, after U.S. peer Lululemon Athletica LULU.O cut its annual profit forecast.

Dassault Systemes DAST.PA fell 1.5% after the French software company extended the target period of its medium-term earnings per share forecast by one year.

Renk R3NK.DE slipped about 5%, among the worst performers on the STOXX 600, after Exane BNP Paribas downgraded the stock to "underperform" from "neutral".

On the data front, German exports and industrial output appeared to fall more than expected in April, as demand from the U.S. decreased following months of strong purchases in anticipation of U.S. tariffs.

In May, British house prices dropped by a larger margin than expected.