Wall Street drops, European shares end flat on ECB, US data

US stocks fell on Thursday as economic data sent mixed signals on the recovery a day before the April payrolls report.

Slower-than-expected growth in the dominant US services sector drove the day's trading. The retail sector dragged the market lower after several chains, including Target Corp and Gap Inc, fell after missing April sales estimates.

The Dow Jones industrial average dropped 61.98 points, or 0.47 percent, to 13,206.59 at the close. The Standard & Poor's 500 Index fell 10.74 points, or 0.77 percent, to 1,391.57. The Nasdaq Composite Index lost 35.55 points, or 1.16 percent, to 3,024.30.

European equities erased early gains to close broadly flat, as weak US data and dampened expectations of fresh central bank measures to stimulate growth eclipsed strong company earnings, raising the prospect of more market weakness.

European Central Bank President Mario Draghi said the ECB had not discussed cutting interest rate this month and pointed to signs of economic recovery even while acknowledging that downside risks to growth remain.

The pan-European FTSEurofirst 300 index closed up 0.07 percent at 1,044.39 points, reversing earlier gains of as much as 1 percent and failing hold above the 100 day moving average around 1,047.12 for a second session in a row in a mildly negative technical signal.

Earlier, Japan's Nikkei share average gained a modest 0.3 percent, buoyed by an easing yen after US manufacturing data beat expectations, but investors were restrained ahead of national holidays and European elections at the weekend.

The Nikkei ended up 29.3 points at 9,380.5, below its 13-week moving average of 9,521.19.