UPDATE 1-Tech stocks lift European shares after Hexagon-Cadence deal, US jobs data in focus

European stocks edged up on Friday ahead of a highly anticipated U.S. jobs report, while tech stocks got a lift from Hexagon after the Swedish firm said it will sell its design and engineering unit to U.S.-based Cadence Design. The pan-European STOXX 600 was up 0.32% at 551.83 points by 0821 GMT.

Technology stocks rose 0.8% and were among the top sectoral performers, with Hexagon gaining 7.1%. The company's deal with Cadence, worth $3.16 billion, is expected to close in the first quarter of 2026. On the flip side, Temenos tanked 12% to the bottom of the benchmark index after the banking software group parted ways with its CEO Jean-Pierre Brulard.

Investors will now focus squarely on U.S. payrolls data for August, which is expected at 1230 GMT. Signs of weakness in the report could be crucial for investors who have been pricing in a 25-basis-point Federal Reserve rate cut at its meeting later this month. "The market is going to sort of recalculate and try and figure out if there are one-off impacts in the data. We have seen a loosening in the labour market through the other data that we've seen from the U.S. this week," said Jane Foley, a strategist at Rabobank.

The STOXX 600 was set to end the week marginally higher, recovering slightly from a selloff earlier this week as concerns regarding government fiscal stability across developed markets triggered sharp declines in longer-dated bonds. Bond yields move inversely to prices. Markets are also bracing for the likelihood that French prime minister Francois Bayrou could lose a vote of no-confidence on Monday due to internal divisions on how to plug the euro zone's biggest fiscal deficit.

French stocks have underperformed the benchmark index so far this year and the country's credit was downgraded by Moody's after its previous government collapsed last year. A repeat would be a heavier blow, pushing France to a lower rating category and raising the risk of forced selling of its already pressured bonds.

On the data front, German industrial orders unexpectedly fell in July due to a drop in large-scale orders. Orsted gained 1% after shareholders voted for a proposed $9.4 billion rights issue. Shares had fallen earlier in the session as the Danish wind farm operator cut its annual profit forecast.

Safran rose 1.2% after a report said the French aerospace and defence group is exploring the sale of a large part of its aircraft interiors business that could be worth as much as $1.76 billion. ($1 = 0.8542 euros)

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