LONDON (AP) -- Markets drifted lower on Thursday as investors became cautious ahead of closely-watched U.S. jobs figures that could set the tone going into February.
Sentiment had turned sour on Wednesday after figures showed the U.S. economy shrank by an annualized rate of 0.1 percent in the fourth quarter, its first contraction since the middle of 2009.
"That does appear to have knocked some of the stuffing out of the recent market rally," said Michael Hewson, senior market analyst at CMC Markets.
Following a buoyant start to the year, many stock indexes are near multi-year highs and the Dow Jones index is not far off its all-time high. But further advances have proven tough this week. Fairly disappointing earnings from the likes of Royal Dutch Shell and AstraZeneca did little to prompt enthusiasm in Europe.
Not even positive U.S. figures on personal income could give markets any renewed momentum as traders awaited Friday's nonfarm payrolls data, which often set the market tone for a week or two after their release.
Britain's FTSE 100 fell 0.7 percent to close at 6,276.88 while Germany's DAX shed 0.5 percent to 7,776.05. The CAC-40 in France ended 0.9 percent lower at 3,732.60.
In the U.S., the Dow Jones industrial average was 0.1 percent lower at 13,893.47 while the broader S&P 500 index was also down 0.1 percent, to 1,500.47.
Analysts said markets are unlikely to move sharply until the January payrolls figures, which may garner more attention this month following Thursday's surprise news of the U.S. economic contraction.
"With payrolls due tomorrow there could well be a temptation for many to sit on the sidelines for a short while," said Fawad Razaqzada, market strategist at GFT Markets.
Earlier in Asia, the regional heavyweight, Japan's Nikkei 225 index, closed 0.2 percent higher at 11,138.66, recovering from early morning losses sparked by lower-than-expected growth in December's industrial production. Output climbed a seasonally adjusted 2.5 percent from November but most analysts had forecast an improvement of more than 4 percent.
Hong Kong's Hang Seng fell 0.4 percent to 23,729.53 while South Korea's Kospi shed 0.1 percent to 1,961.94.
Trading in currency markets was fairly flat, too, with the euro up 0.1 percent at $1.3585 and the dollar 0.3 percent higher at 91.39 yen.
In commodity markets, the benchmark New York rate for crude oil was down 49 cents at $97.45 a barrel.
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Pamela Sampson in Bangkok contributed to this report.