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European shares fall after Wall Street closed lower

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Market split on how to interpret US jobs data

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Japan gives strong verbal signal about currency

intervention

(Updates with European trading)

By Elizabeth Howcroft

PARIS, Nov 21 (Reuters) - European shares fell on

Friday, extending a selloff after Wall Street dropped overnight

as traders continued to worry about tech stock valuations.

U.S. jobs data presented a mixed picture, adding to traders'

uncertainty and diminishing hopes that the Federal Reserve will

cut rates again this year.

Technology stocks led Wall Street sharply lower on Thursday

with a positive earnings report from chipmaker Nvidia ( NVDA )

not enough to dispel fears about an AI-fuelled market bubble.

The downturn continued during Friday's Asian trading, as

investors dumped riskier assets.

At 1007 GMT, the MSCI World Equity Index was down 0.5% and

on track for a 3.2% weekly drop, its biggest drop since March

.

The pan-European STOXX 600 was down 1% and London's

FTSE 100 was down 0.6%.

"HIGHLY COUNTERINTUITIVE" MOVES

Already under pressure from the wider downturn, European

defence shares fell to their lowest since early

September, after Ukraine's president said he was ready for

"honest" work on a U.S.-backed plan to end the war.

Thursday's delayed U.S. jobs data showed that employment

growth accelerated in September but the jobless rate was at its

highest in four years.

Hani Redha, a portfolio manager at PineBridge Investments,

called the market reaction to the jobs data and Nvidia ( NVDA ) earnings

"highly counterintuitive".

"I would primarily put this down to stretched positioning

and heightened sensitivity to this AI bubble talk, which I think

is overblown," he said, adding that there are parts of the

market which are justifiably under pressure and not supported by

fundamentals.

"It may be that Nvidia ( NVDA ) was a kind of an ATM machine

yesterday - people selling what they can, to book gains, to

cover for speculative losses elsewhere."

Global markets have been driven to record highs by an AI

investment frenzy, but some market participants are becoming

concerned about the risk of massive spending not translating

into meaningful progress. Alphabet's CEO Sundar Pichai earlier

this week said that no company would be unaffected if the AI

boom collapses.

Others are still expecting further AI-driven gains.

"AI remains a key driver of equity markets. We expect rising

capex and accelerating adoption to push AI-linked stocks higher

in the year ahead," said UBS's chief investment officer Mark

Haefele in a monthly note.

YEN BOOSTED BY VERBAL INTERVENTION

Japan's finance minister, Satsuki Katayama, said that

intervention in the yen was a possibility, in his strongest

comments so far about the currency, which has fallen around 6%

since Prime Minister Sanae Takaichi was elected leader of her

party.

The yen found some support after the comments, and was at

156.55 per dollar, still within reach of Thursday's 10-month low

of 157.9.

Japan's cabinet approved an economic stimulus package worth

around $135 billion.

The euro was steady at $1.1516 and the dollar index

also little changed at 100.23, set for a 0.8% weekly

gain.

Euro zone bond yields fell, with the benchmark 10-year

German Bund yield retreating from a six-week high, down 5 basis

points at 2.6726%.

Oil prices fell for the third day running, as the U.S. push

for a Russia-Ukraine deal to end the war raised the possibility

of more oil supplies being brought onto the market.

Bitcoin fell to its lowest in seven months, at $82,013.57

.

Gold was down 0.9% at $4,040.59 per ounce.