Europe open: Shares flat as traders eye US payroll data for rate clues

(Sharecast News) - European shares opened flat on Friday as investors digested data from China showing factory activity for August expanded while the country's central bank announced a cut in reserve requirements to boost the economy. The pan-European Stoxx 600 index had barely moved the needle, with major regional bourses mixed. Traders were also eyeing US non-farm payroll data, with economists forecasting 170,000 additions.

"A tighter-than-expected job market will add fuel to the inflation fire, while a slowdown would be welcome and suggest that monetary tightening is starting to have some effect," said Hargreaves Lansdown analyst Sophie Lund-Yates.

"There's growing hope that interest rates are going to remain in their current position, rather than rise, at the next meeting, and the jobs data will be an important component of that. There's also an argument to say that we've only just started restrictive cuts, everything else has been playing catch up to deal with inflation, so if heat is to come out the economy, cuts may be needed."

In Beijing, a survey showed activity in China's manufacturing sector unexpectedly grew in August. The Caixin manufacturing purchasing managers' index rose to 51.0 from 49.2 the month before, coming in above the 50.0 that separates contraction from expansion.

This was also comfortably ahead of analysts' expectations for a reading of 49.3 and marked the highest reading since February.

In equity news, shares in UK insurer Direct Line were lower as it agreed with regulators to review overcharging of its existing motor and home policyholders in a move that could cost it £30m in redress.

Reporting by Frank Prenesti for Sharecast.com