Quiet day for Euro markets

European stocks ended mostly flat on Thursday, as investors took a breather after the previous session's jump while recently-hit construction stocks extended their recovery, aided by a batch of positive US data.

Though the data showed an unexpected rise in pending sales of previously owned homes, a pick-up in factory orders and a decline in initial jobless claims, investors remained cautious ahead of Friday's all-important US monthly jobs data, expected to show a fall in non-farm payrolls.

The FTSEurofirst 300 index of top European shares closed 0.08 percent lower at 1,054.85 points.

The benchmark index, which surged 2.9 percent on Wednesday following strong manufacturing data from the United States and China, is still down 2.1 percent from a peak in early August, after a string of grim economic figures ignited fears that the US economy could slip back into recession.

"Yesterday's rebound confirms that the recent sell-off sparked by fears of a double-dip recession had been exaggerated. After all, the data is not that bad," said Marc Touati, head of economic research at Global Equities in Paris.

"Tomorrow's payrolls figures will be a mixed bag, but looking forward, the newsflow is bound to improve and the equity markets' current levels are a good buying opportunity, just look at all the M&A activity."

Construction shares were among the top gainers, still reeling from a dismal month of August marked by revenue warnings from some of the sector's biggest companies, feeling the pinch of cuts in infrastructure spending.

Both CRH and Saint-Gobain rose 1 percent, Lafarge gained 0.7 percent and HeidelbergCement added 2.3 percent.

FORWARD RATIO

The STOXX Europe 600 construction and materials index, down 13 percent in 2010, carried a one-year forward price-to-earnings of 10.43 versus its 10-year average of 12.36.

By comparison, the STOXX Europe 600 had a one-year forward P/E of 9.96 versus a 10-year average of 13.67.

Yell Group surged 13 percent, with traders citing market talk of bid interest for the British yellow-pages publisher.

Around Europe, UK's FTSE 100 index ended up 0.1 percent, Germany's DAX index was flat and France's CAC 40 gained 0.2 percent.

The Euro STOXX 50, the euro zone's blue chip index, ended flat at 2,715.19 points, staying above its 50-day moving average pierced on Wednesday and sitting just below a key resistance level at 2718, the 50 percent Fibonacci retracement from the July 20 to Aug. 5 rally.

"Prices are now trading within the Aug. 12 to Aug. 19 congestion and this could present significant selling pressure and volatility," Raghee Horner, chief market analyst at Autochartist, wrote in a note.

"If the index can manage a close above the 2,717 to 2,720 area, this will represent buying support at the daily 50 percent retracement; it's from this support that the bulls could manage a test of the August 19 2,757 high," Horner wrote.

- Reuters