EUROPE MARKETS: European Stocks Climb Ahead U.S. Nonfarm Data

By Sara Sjolin, MarketWatch

LONDON (MarketWatch) -- European stock markets extended gains on Friday as investors digested the latest round of earnings reports and waited for the highly anticipated U.S. nonfarm-payrolls report due in the afternoon.

The Stoxx Europe 600 index climbed 0.2% to 323.50, building on gains from Thursday, when the benchmark posted its biggest advance since Dec. 19.

The rally on Thursday came after the European Central Bank left its key lending rate at a record low of 0.25%, although ECB President Mario Draghi reiterated a pledge to take further easing action if needed.

Among notable movers in Friday's action, shares of Air France-KLM SA gained 3.2% after the airline said passenger traffic rose 3.8% in January.

Shares of ArcelorMittal rose 2.8% after the French steelmaker said its loss narrowed in the fourth quarter, helped by cost saving and a rise in steel and iron-ore shipments. Peer firm ThyssenKrupp AG gained 0.8%.

On a more downbeat note, shares of Skanska AB dropped 3.1% after the Swedish construction firm reported fourth-quarter profit and revenue below analyst expectations.

Later in the day, attention turns to the U.S., where the closely watched nonfarm-payrolls report and unemployment rate are out at 1:30 p.m. London time, or 8:30 a.m. Eastern Time. Economists polled by MarketWatch expect 190,000 jobs were added to the economy in January and the joblessness level dropped to 6.6% from 6.7%.

"It is the most important data not only for the U.S. equity markets, but also for global markets, and this month in particular it has even greater prominence," said Naeem Aslam, chief market analyst at Ava Trade, said in a note.

"We think that if the number falls below the 120,000, then we could potentially say that tapering is conceivably making its impact on growth. The equity market may take this as a good news, and we could see a rally for the equity market, because the likelihood of further tapering may go lower," he added.

The Federal Reserve started tapering its asset-purchase program in December and made further cuts to it in January, leaving the monthly purchases at $65 billion.

U.S. stock futures pointed to a higher open on Wall Street ahead of the data.

In Europe, Germany's DAX 30 index was up 0.1% to 9,261.48 and the U.K.'s FTSE 100 index rose 0.1% to 6,564.38. France's CAC 40 index fell 0.1% to 4,185.03.

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