By Sara Sjolin, MarketWatch

LONDON (MarketWatch) -- European stock markets struggled for direction in early action on Friday, as investors cautiously stayed on the sidelines ahead of the much anticipated nonfarm payrolls report from the U.S.

The Stoxx Europe 600 index inched 0.1% higher to 291.86, after closing down 1.2% on Thursday.

Shares of Deutsche Telekom AG climbed 1%, after the company said its T-Systems unit won a contract to provide cloud services to Finnish elevator company Kone Oyj

BT Group PLC added 1.8%, after Barclays lifted the telecom firm to overweight from equal weight.

For the broader European stock markets, investors were anxiously awaiting the latest report on nonfarm jobs in the U.S. along with the unemployment rate to gauge if there is any improvement in the labor market. A solid take on the unemployment situation could actually spur a selloff in the equity markets, as it may trigger the U.S. Federal Reserve to consider scaling back its bond purchases.

Fed Chairman Ben Bernanke said last month that a tapering could begin in coming months if data continue to improve, fueling worries the $85-billion-a-month liquidity injection into the market will soon come to an end.

U.S. stock futures pointed a lower open on Wall Street.

Back in Europe, insurance firms were among notable gainers after Citigroup lifted the financial-services sector to overweight from neutral. Shares of Allianz SE added 0.8%, Swiss Re AG put on 0.9% and AXA SA climbed 0.5%.

France's CAC 40 index traded 0.2% higher at 3,820.14, while Germany's DAX 30 index added 0.2% to 8,113.28.

The U.K.'s FTSE 100 index slipped 0.1% to 6,332.60.

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