European shares edged higher on Friday, with investors focusing on U.S. non-farm payrolls data for clues on the Federal Reserve's next policy move.
The pan-European STOXX 600 index rose 0.2%, with volumes expected to be subdued due to holidays in the UK and China. The day's gains cut weekly losses to about 0.5%.
Healthcare, industrials and miners boosted the STOXX 600, but the auto sector slipped 0.4% as France's Faurecia slid 5.1%.
The auto parts supplier said it launched a 705 million euro ($758 million) capital increase to fund its acquisition of German rival Hella.
Miners and energy stocks also fell. Oil prices were lower after OPEC+ decided to increase production.
On the data front, investors are hoping that any signs of a slowdown in U.S. employment could sway the Fed toward a less aggressive policy path after its members signalled overnight that tightening may not end in September should inflation continue to rise.
Meanwhile, data this week showing record high inflation in the euro zone spurred bets that the ECB may be forced to tighten sooner or make larger interest rate hikes.
The central bank has so far signalled plans to start raising rates in July to reach 0% or above by September.
"In view of the dramatic inflation trend and the fact that the ECB is so clearly 'behind the curve', compared with the Fed, the ECB's language should tend to become more hawkish," Commerzbank analysts wrote in a note.
European equity markets started the week on a stronger footing after China eased some COVID-19 restrictions and revealed more stimulus, but the optimism was swiftly undone by data that pointed to economies tipping into recession.
The European Union's partial ban on Russian oil imports, in retaliation to its invasion of Ukraine, also fuelled fears of inflation rising further.
"A recession, if any, will not occur this year but most probably in 2023. That said, we expect the market to discount more properly a lower momentum in the economy," equity strategists at Generali Investments said.
Among other stocks, Italy's Leonardo rallied 2.8% after Germany's Rheinmetall made an offer for a minority stake in its OTO Melara cannon maker unit, according to a document and two sources close to the matter.
Rheinmetall has set a value of 190-210 million euros ($203.91- $225.37 million) as an indicative price for the 49% stake in OTO Melara.
(Reporting by Susan Mathew in Bengaluru; Editing by Shailesh Kuber and Anil D'Silva)