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European Stocks Calm; Payrolls and ECB Stimulus in Focus

European stock markets traded largely unchanged Thursday, with investors displaying caution ahead of Friday’s key U.S. payrolls release while European Central Bank members discussed withdrawing monetary stimulus. At 3:40 AM ET (0840 GMT), the DAX in Germany traded 0.1% higher, the CAC 40 in France rose 0.1%, while the U.K.’s FTSE 100 dropped 0.1%, with mining heavyweight BHP (LON:BHPB) weighing as it went ex-dividend.

The rebound in the Eurozone economy, coupled with a sharp rise in inflation, has brought the subject of the ECB’s extraordinary monetary support back into debate, to the possible detriment of the region’s stock markets.

Earlier this week, inflation in the euro region jumped to 3%, well above the ECB’s goal, and this prompted Jens Weidmann, the head of the Bundesbank, to talk on Wednesday about scaling back this stimulus.

While Weidmann and fellow hawks Robert Holzmann and Klaas Knot are typically in a minority on the ECB's governing council, the accounts of the ECB's last meeting included the clearest acknowledgement of excessive inflation risks since the start of the pandemic 19 months ago.

The region’s July PPI number, due for release at 5 AM ET (0900 GMT), will be carefully studied.

The week’s major focus, though, is Friday’s release of the key August monthly U.S. employment report as this could guide future Federal Reserve policy.

Median forecasts are for a rise of 750,000 nonfarm jobs, but the ADP nonfarm employment change disappointed at 374,000. The weekly initial jobless claims data, later Thursday, will also be

watched as a precursor to Friday’s release.

Back in Europe, Swedish Orphan Biovitrum (ST:SOBIV) stock soared 24% after U.S. venture capital firm Advent International and Aurora Investment offered to buy the drugmaker.

Ryanair (LON:RYA) stock rose 0.6% after the budget airline, Europe’s largest by passenger numbers, said it flew 11.1 million passengers in August, above target and 75% of the number it carried in August 2019 before the Covid-19 pandemic, while British engineering firm Melrose Industries (LON:MRON) stock climbed 4.2% as it reported a first-half profit.

On the flip side, Lagardere (PA:LAGA) stock fell 0.8% following billionaire Bernard Arnault restructuring his holdings in the French media and publishing firm, while CMC Markets (LON:CMCX) stock slumped 25% after the U.K. based financial services group issued a profit warning as summer trading was sluggish.

Crude prices stabilized Thursday after the Organization of Petroleum Exporting Countries and their allies, a group known as OPEC+, confirmed its intention at a meeting Wednesday to add another 400,000 barrels per day of supply each month through December. However, the group also raised its demand forecast for 2022.

Doubts remain about demand growth in the near term, however, given the continued spread of Covid-19 in the U.S. and Europe, and with a number of U.S. refiners, a major source of demand, remaining offline after Hurricane Ida hit the Gulf Coast area earlier in the week.

That said, U.S. crude inventories dropped by a hefty 7.2 million barrels last week as the U.S. gears up for the last peak of its summer driving season this weekend.

By 3:40 AM ET, U.S. crude futures traded flat at $68.59 a barrel, while the Brent contract rose 0.1% to $71.61.

Additionally, gold futures rose 0.1% to $1,816.50/oz, while EUR/USD traded 0.1% higher at 1.1848.

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