European Shares Waver as U.S. Jobs Data Looms, Defence Stocks Slip

European markets tempered gains on Tuesday, led by investor caution ahead of key U.S. jobs data. The STOXX 600 dropped 0.1%, with technology and defence stocks weighing on the index. Moves in U.S. monetary policy and NATO-like security guarantees for Kyiv influenced market sentiment.

On Tuesday, European shares pulled back from previous gains as investors turned cautious ahead of crucial U.S. jobs data. The pan-European STOXX 600 dipped 0.1% to 581.87, reversing robust gains seen earlier. Regional indices in Germany and France also suffered slight declines.

The upcoming U.S. employment reports for October and November are significant indicators closely watched by market participants, as they could influence future U.S. Federal Reserve monetary policy. After the Fed's recent meeting, where commentary was less hawkish than expected, analysts are keen to glean insights about potential interest rate cuts next year.

In parallel, U.S. discussions over providing NATO-like security guarantees for Kyiv inched forward. Defence stocks responded negatively with Rheinmetall, Hensoldt, and Leonardo registering losses. The technology sector also dragged the index down, but banks experienced modest gains, buoyed by UBS's stock upgrade by BofA Global Research.

(With inputs from agencies.)