European stock markets edged higher on Thursday, buoyed by optimism over trade developments, though gains were somewhat restrained as investors awaited the release of the crucial U.S. monthly employment figures.

By 07:05 GMT, Germany’s DAX rose 0.4%, France’s CAC 40 added 0.3%, and the UK’s FTSE 100 climbed 0.5%.

Trade hopes lift sentiment after U.S. gains

European shares took cues from Wall Street’s strong performance overnight, where the S&P 500 and NASDAQ Composite both hit record levels. The positive mood was sparked by President Donald Trump’s announcement that a trade deal had been reached with Vietnam, though details remain limited.

This announcement has raised expectations that further agreements may be finalized ahead of the July 9 deadline. This follows the earlier trade deal with China, which led the Trump administration to ease restrictions on chip design software sales to China.

The European Commission, acting on behalf of the EU, is scheduled to hold discussions with U.S. officials later this week.

Focus on U.S. payroll data

While eurozone services sector data are due later Thursday, all eyes remain on the U.S. payroll report. Analysts forecast an increase of around 110,000 jobs in June, down from May’s 139,000, with the unemployment rate expected to tick up slightly to 4.3%. However, there is uncertainty, as a private sector payroll report on Wednesday showed the first drop in over two years.

The U.S. labor market’s resilience has reassured many Federal Reserve officials that interest rates can remain steady while the impact of tariffs on inflation becomes clearer.

Currently, the market prices in roughly a 25% chance of a rate cut in July, but a weaker-than-expected jobs report could increase those odds substantially.

UK political jitters affect markets

In the UK, investors remain cautious following a sharp rise in gilt yields Wednesday, triggered by concerns over the government’s handling of welfare reform. Chancellor Rachel Reeves appeared visibly distressed in Parliament, with the government citing a “personal matter.” Prime Minister Keir Starmer later affirmed his full support for Reeves.

Corporate news highlights

Currys (LSE:CURY) reported annual results surpassing expectations, with strong sales growth and disciplined cost management helping the retailer navigate inflationary pressures and higher wage expenses.

Meanwhile, Watches Of Switzerland (LSE:WOSG) forecasted full-year revenue growth between 6% and 10%, buoyed by its U.S. business surpassing $1 billion in revenue for the first time, driven by robust consumer demand.

Oil prices pull back amid supply concerns

Oil prices declined on Thursday, giving back some of Wednesday’s sharp gains following an unexpected rise in U.S. crude inventories and ahead of an OPEC+ meeting anticipated to result in increased output.

At 03:05 ET, Brent crude futures fell 0.8% to $68.58 per barrel, while U.S. West Texas Intermediate futures dropped 0.8% to $66.90.

Wednesday’s jump in oil prices was linked to Iran’s suspension of cooperation with the U.N. nuclear watchdog, stoking fears of supply disruptions in the Middle East.

However, U.S. government data revealed a 3.85 million barrel build in inventories last week, raising questions about fuel demand strength during the summer.

OPEC+ producers are expected to meet over the weekend and likely agree to raise output by around 411,000 barrels per day starting in August.

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