Gold steadied on Friday as a retreat in equities and the dollar supported the metal after its biggest quarterly rise in nearly 30 years, but moves were muted ahead of key U.S. payrolls data.

London (Apr 1)  It's sunny in London Friday but the markets seem to have caught a second-quarter cold, shrugging off a better-than-expected purchasing managers index result from China to focus instead on poor figures from Japan and decidedly mixed results nearer home.

 Across Europe, investors are looking to the U.S. nonfarm payrolls report for March on Friday for an indication of whether the Federal Reserve will tighten as cautiously as Chair Janet Yellen seemed to suggest this week.

In London, the FTSE 100 was off 1.19% at 6,101.3, while in Frankfurt the DAX was down 1.68% at 9,798.15. In Paris, the CAC 40 was down 1.82% at 4,305.22.

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Manufacturing growth in the U.K. disappointed for the second month running, as the Markit/chartered Institute of Procurement & Supply PMI came in at 51.0. That's better than in February and still signals expansion, but economists had been hoping for more. And uncertainty over the future of steel production in Britain and the country's continued membership of the European Union continues to weigh on sentiment.

Meanwhile, Markit's PMI outturn for the eurozone was slightly up from the previous month at 51.6, but deflationary pressures are strong across the zone, the Spanish economy's recovery showed signs of slowing and in Italy a positive PMI was undermined by a sudden increase in unemployment.

In company news, supermarket J. Sainsbury (JSAIY)  dropped almost 2.5% to a low of 269.6 pence before recovering somewhat, on news that Home Retail Group agreed to its £1.2 billion ($1.7 billion) cash and shares offer. By mid-morning, Sainsbury was still down 1.4% at 272.4 pence. Home Retail itself, which sold one of two main businesses, Homebase, earlier this year and now mainly consists of the catalog-based general retail unit Argos, also declined following the announcement, falling 0.6% to 164.8 pence.

Irish banana trader Fyffes (FYFFF)  rose 3.9% on its acquisition of Canadian mushroom producer Highline Produce for C$145 million ($111.2 million), a move it said would be immediately accretive to its earnings per share but would leave its net debt at less than 2.5 times Ebitda. Fyffes said it expects net debt to reduce to below twice Ebitda within two years based on the cash flows of both companies.

French luxury goods group Kering (PPRUY) dropped over 2% on the news that Hedi Slimane, creative director of fashion house Yves Saint Laurent, is to step down after four years.

Also in the French fashion world, Chinese textile group Shandong Ruyi, which is listed on the Shenzhen exchange, said it will buy French fashion retailer SMCP SAS from New York-listed private-equity firm Kohlberg Kravis Roberts (KKR - Get Report) in a deal valuing the business at about €1.3 billion ($1.48 billion). KKR stands to double the cash it put into SMCP and exit with an internal rate of return of more than 20% over three years.

In Asia, Japan's Nikkei 225 plummeted 3.55% to close at 16,164.16, while the Topix index slid 3.4% to finish the day at 1,301.4. Hong Kong's Hang Seng index dropped 1.34% to 20,498.92, but in mainland China, the combined Shanghai and Shenzhen CSI300 bucked the trend rising after a middle of the day slump to close up 0.12% at 3,221.895.

Source: The Street