World stocks clung close to record highs as worries about the Delta variant of COVID-19 offset positive sentiment from surging euro zone business activity and a welcome US jobs report.
The STOXX index of 600 leading European companies was flat on Monday, reversing earlier losses after data showed euro zone businesses expanded activity at the fastest rate in 15 years in June.
Activity for British services firms also soared in June, albeit at a slightly slower rate. French shares sank 0.4 per cent as Health Minister Olivier Veran warned France could be heading for a fourth wave of the pandemic due to the highly transmissible Delta variant.
COVID-19 angst also weighed on Japan shares, with the Nikkei falling 0.6 per cent, to a two-week low, following a surge in infections in Tokyo, just weeks before the city hosts the Olympics.
MSCI's broadest index of Asia-Pacific shares outside Japan , was flat.
China's blue chip stock index recovered from earlier losses to close 0.1 per cent higher as pledges by Beijing to continue policy support for its tech sector helped counter worries about a crackdown on ride-hailing giant Didi Global and scrutiny of other platform companies in the country.
The MSCI All Country World index closed at a record 724.66 last week, and was 0.1 per cent higher on Monday.
Trading was thinner than usual with US markets closed for the extended 4th of July weekend.
"Markets in general are still trying to find their feet," said James Athey, investment director, Aberdeen Standard Investments.
"Equities, of course, continue to shrug off or ignore anything that might be considered remotely negative as they continue their merry and complacent dance towards an inevitable reckoning."
S&P 500 futures signalled a 0.1 per cent dip for Tuesday's open, after the index closed 0.8 per cent higher at a record on Friday. The Dow Jones Industrial Average rose 0.4 per cent and the Nasdaq Composite added 0.8 per cent to also hit a record.
US non-farm payrolls increased by a bigger-than-expected 850,000 jobs last month, data on Friday showed.
But the unemployment rate unexpectedly ticked up to 5.9 per cent from 5.8 per cent, while the closely watched average hourly earnings, a gauge of wage inflation, rose 0.3 per cent last month, lower than the consensus forecast for a 0.4 per cent increase.
"The goldilocks print suggests there is no need to accelerate the tapering timeline or the implied rate hike profile," Tapas Strickland, an analyst at National Australia Bank, wrote in a client note.
"Overall the level of payrolls is still 6.8 million below pre-pandemic February 2020 levels and is still below the level of substantial progress needed by the Fed. As such there is nothing in this report for the Fed to become hawkish about."
Eyes will be trained on the minutes of the Federal Open Markets Committee meeting from last month, when policymakers surprised markets by signalling two rate hikes by the end of 2023.
Commentary by Fed officials since then has been more balanced, particularly from Chair Jerome Powell, and investors parse Wednesday's release for further clues on the timing of policy tightening.
Euro zone government bond yields nudged higher but analysts expect the recent downward trajectory to resume after the US payrolls data.
Germany's 10-year Bund yield was up by half a basis point at -0.231 per cent.
The dollar was mostly flat on Monday after dropping from a three-month high at the end of last week, pressured by the weaker details of the US payrolls report.
The greenback climbed by about 0.2 per cent to $1.1859 per euro and traded flat at 111.05 yen.
Gold was up 0.3 per cent to $1,792.30 an ounce.
Crude oil was rangebound as OPEC+ talks dragged on. Saudi Arabia's energy minister pushed back on Sunday against opposition by fellow Gulf producer the United Arab Emirates to a proposed OPEC+ deal and called for "compromise and rationality" to secure agreement when the group reconvenes on Monday.
Brent crude added 0.1 per cent $76.21 a barrel, and US crude gained 0.1 per cent to $75.25 a barrel.