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US stocks recovered lost ground to close down just slightly Thursday, while those in Europe finished lower, ahead of key US jobs data.
The Dow Jones Industrial Average finished flat, while the S&P 500 and Nasdaq index ticked lower.
Analysts say signs of a robust American economy, such as strong labor market data this week, are in fact bad news for equities as it gives the Federal Reserve more reason to keep monetary policy tight through the end of the year and beyond.
The prospect has weighed heavily on US Treasury yields, which hit their highest levels since 2007 this week as investors fear that high borrowing costs for businesses and consumers will eventually drag on the economy.
Those surging bond yields are responsible for pushing up the weekly average rate on the popular 30-year mortgage to a new 23-year high, Freddie Mac announced on Thursday.
All eyes are on Friday's monthly US employment data, which will give investors a good idea if recent signs of a softening in the labor market is likely to continue.
"If there's any signs of the labour market cracking then that would obviously be positive and maybe could send stocks a little bit higher," Peter Cardillo from Spartan Capital told AFP.
"The markets sell-off which saw government bond prices fall and yields rise has taken centre stage this week, and investors continue to watch the 10-year Treasury yield like a hawk," said AJ Bell investment director Russ Mould.
Oil prices plunged further from recent highs after a US report on gasoline inventories came in much higher than analysts expected, an indication of weakening demand in the world's largest economy.
"Gasoline inventory builds have spilled over into crude markets amid concerns about a potential 2024 recession driven by rising interest rates," said Stephen Innes, a partner at SPI Asset Management.
Europe's main indices had spent most of the session in positive territory on the back of Wall Street's rebound on Wednesday, before being dragged down as US markets fell earlier in the day.
Asian indices also closed higher, with Tokyo jumping 1.8 percent by the close. Markets in mainland China were shut for a weeklong holiday.
- Key figures around 2045 GMT -
New York - Dow: FLAT at 33,119.57 points (close)
New York - S&P 500: DOWN 0.1 percent at 4,258.19 (close)
New York - Nasdaq: DOWN 0.1 percent at 13,219.83 (close)
London - FTSE 100: UP 0.5 percent at 7,451.54 (close)
Frankfurt - DAX: DOWN 0.2 percent at 15,070.22 (close)
Paris - CAC 40: FLAT at 6,998.25 (close)
EURO STOXX 50: FLAT at 4,099.81 (close)
Tokyo - Nikkei 225: UP 1.8 percent at 31,075.36 (close)
Hong Kong - Hang Seng Index: UP 0.1 percent at 17,213.87 (close)
Shanghai - Composite: Closed for a holiday
Euro/dollar: UP at $1.0553 from $1.0504 on Wednesday
Pound/dollar: UP at $1.2192 from $1.2135
Euro/pound: DOWN at 86.53 pence from 86.55 pence
Dollar/yen: DOWN at 148.50 yen from 149.12 yen
Brent North Sea crude: DOWN 2.09 percent at $84.07 per barrel
West Texas Intermediate: DOWN 2.3 percent at $82.31 per barrel
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T.Dixon--TFWP