European stocks close higher as investors digest U.S. jobs data; Sainsbury’s shares fall 5%

LONDON — Europe-listed shares finished higher on Friday, as investors assessed key economic data out of the U.S. that could influence the Federal Reserve’s monetary policy decisions this year.

The pan-European Stoxx 600 was almost 1% higher at the closing bell, with major regional bourses and most sectors in positive territory.

Data released by the U.S. Bureau of Labor Statistics on Friday showed nonfarm payrolls rose by 50,000 in December, lower than the downwardly revised 56,000 in November and short of the Dow Jones estimate of 73,000.

European stocks tracked morning gains on Wall Street, as the figures spurred hopes that the softening labor market will prompt an interest rate cut from the Fed at its meeting toward the end of this month.

Defense stocks extended gains for a fifth consecutive day on Thursday, adding 0.8% by the end of Friday’s session. It follows President Donald Trump’s call for U.S. military spending to rise and continued rhetoric on annexing Greenland.

Trump called for a 50% increase in U.S. military spending, eyeing a $1.5 trillion budget in 2027, in a Truth Social post late Wednesday.

He has also been ramping up calls for Greenland to be brought under Washington’s control and is considering various options to make it happen — including military action. It could mean the end of NATO, given the U.S. and Denmark, which is responsible for the defense of Greenland, are both members.

Meanwhile, the CEO of mining company Amaroq told CNBC the U.S was mulling investing in critical minerals mining projects on Greenland. It comes ahead of high-stakes talks between Washington and Danish officials over the island’s future as Trump maintains its importance to U.S. national security.

Looking at individual stocks, British aerospace group Rolls-Royce hit a fresh high on Friday, finishing the session 1.7% higher, buoyed by the defense sector and positive sentiment toward the U.K.’s FTSE 100.

It was confirmed Friday morning that British mining firm Rio Tinto is in preliminary talks to acquire Swiss firm Glencore, in what could create the world’s largest mining company. Glencore shares closed 9.6% higher.

Shares of European oil companies fell this week as investors continue to react to Trump’s action in Venezuela, but pared some gains during Friday’s session. BP finished 2.4% higher, Shell added 3% and TotalEnergies gained 3.3%.

It’s been a busy week for U.K. retailers, with reports from Tesco, Marks and Spencer and Sainsbury’s. Each reported strong Christmas food sales.

Tesco lifted its end-of-year profit guidance for fiscal 2026, from £2.9bn ($3.9 bn) to £3.1bn. Its stock was 1.6% lower at the close of dealmaking.

Sainsbury’s reported a 3.4% rise in underlying sales for the third quarter and reiterated its full-year guidance for profit of more than £1bn, roughly in line with its last fiscal year result. Shares in the UK’s second largest supermarket chain finished 5.3% lower, sitting near the bottom of the European benchmark for its worst day since Dec. 8.

Elsewhere, European lawmakers provisionally approved a controversial trade agreement with South America’s Mercosur bloc on Friday. The deal, which has been decades in the making, has seen strong opposition from farmers and some EU member states over concerns it could create unfair competition for European agriculture.

— CNBC’s Olivia Levieux contributed to this report.