by Diana Mandia

(Reuters) – Wall Street is expected to open lower on Friday and European stocks are down mid-session, with caution prevailing ahead of U.S. jobs data and weaker-than-expected euro zone growth and a decline in German industrial production weighing on the trend. New York index futures point to a 0.36 percent drop in Wall Street for the Dow Jones Industrial Average, a 0.65 percent drop in the Standard & Poor’s 500 and a 1.17 percent drop in the Nasdaq. In Paris, the CAC 40 fell 0.35 percent to 7,406.30 points at around 1058 GMT. In Frankfurt, the Dax fell 0.63 percent and in London, the FTSE 100 lost 0.35 percent.

The EuroStoxx 50 index is down 0.57%, the FTSEurofirst 300 by 0.37% and the Stoxx 600 by 0.39%.

The last session of the week remains marked by investor caution before the publication of the monthly report on American employment on Friday at 12:30 GMT, which should show a rebound in job creation and a drop in the unemployment rate in August.

Worse-than-expected figures or even a rise in unemployment could, however, revive fears of recession in the world’s largest economy and prompt investors to bet on a 50 basis point cut on September 18, the date of the next Federal Reserve meeting.

Uncertainty is therefore keeping investors away from risk, especially after the publication earlier this week of a series of indicators that seem to suggest that the US labor market is weakening.

“The key question is of course how the Fed will react after today’s labor market data… A 50 basis point cut could be seen as an implicit admission that the Fed is behind the curve,” said Teeuwe Mevissen, an analyst at Rabobank.

In Europe, fears about the economy are also present: in Germany, the largest economy in the eurozone, industrial production, figures for which were published on Friday, was much weaker than expected in July, due in particular to difficulties in the automobile sector.

“The figures are a cold shower for anyone hoping for a quick recovery. In fact, they suggest that the bottom of the industry is still far from being reached,” said ING analyst Carsten Brzeski.

The eurozone economy also grew in the second quarter at a slower pace than previously announced, by 0.2% against an initial estimate of 0.3%, according to data published Friday by Eurostat.

The European Central Bank is expected to cut rates by 25 basis points next week, though the outlook beyond that date is less clear. Traders currently expect cuts of about 63 basis points by 2025, up from about 59 basis points earlier this week. STOCKS TO WATCH ON WALL STREET [L8N3KO0L6]

Broadcom fell 9.6% in premarket trading after the chipmaker said it expected fourth-quarter revenue to fall slightly short of estimates, hurt by weak spending in its broadband segment.

Nvidia and Marvell Technology are down about 2%, and the Philadelphia Semiconductor Index, which is made up of listed companies in the electronic components sector, is set for its biggest weekly decline in more than a month.

VALUES IN EUROPE

In terms of values, Elis fell by 14% after information from Reuters according to which the group approached the American Vestis, valued at 3.3 billion dollars on the stock market, with a view to a possible acquisition.

Airbus fell 1.2% as the European Union Aviation Safety Agency (EASA) said on Thursday that at least part of the A350 fleet would be inspected as a precaution after an engine part failed during a flight on a Cathay Pacific A350-1000 plane.

Artificial heart maker Carmat is down more than 3% after cutting its full-year sales targets.

Elsewhere in Europe, Volvo Cars lost 5%, the Swedish carmaker being penalized by its latest announcements on its margin outlook and by the abandonment of its objective of switching to all-electric by 2030.

RATES Eurozone bond yields fell for a fourth straight day on Friday as investors awaited U.S. jobs figures and digested worse-than-expected data on German manufacturing and eurozone growth.

The yield on the ten-year German Bund fell 4.6 basis points to 2.1620% and that of the two-year Bund fell 3.4 basis points to 2.2620%.

The trend is similar in the United States before the publication of the employment indicator and the yield on ten-year Treasuries loses 3.3 basis points to 3.7005%.

CHANGES

The dollar shed 0.12% against a basket of benchmark currencies, continuing its recent losses as traders have sold the greenback fairly consistently over the past two months as concerns grow that slowing U.S. growth could require deeper rate cuts from the Fed.

The euro is rather stable at 1.1109 dollars.

OIL

Oil prices were stable on Friday but headed for a weekly decline.

Brent gained 0.06% to $72.73 per barrel and US light crude (West Texas Intermediate, WTI) 0.03% to $69.17.

(Written by Diana Mandiá, edited by Blandine Hénault)

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