(Reuters) -European shares slipped on Monday, as investors avoided big bets ahead of a long-awaited jobs report from the U.S. that could offer clarity on the health of the world's largest economy. 

The pan-European STOXX 600 closed down 0.5% at 571.68 points. Other regional indexes also declined, with Germany's DAX down 1.2%.

Worries that an interest rate cut by the Federal Reserve may not be imminent and that technology shares are overvalued had sparked a global selloff last week; equities in Europe logged their biggest daily loss in over a month on Friday.

Risk appetite this week is likely to be tested by the September U.S. jobs report, due on Thursday, and an earnings report from global AI bellwether Nvidia, due on Wednesday.

Elsewhere, Japan moved to tamp down an escalating dispute with China over Taiwan that has prompted Beijing to urge citizens to halt travel to its East Asian neighbour.

"The biggest issue for Europe is this sort of war of words that we've seen between China and Japan over Taiwan. We're seeing the luxury sector, Chinese-related stocks are coming under pressure because of that," said Fiona Cincotta, senior market analyst at City Index.

European luxury stocks such as UK's Burberry and France's LVMH fell, losing 6.6% and 2%, respectively.

Financial stocks including banks and insurers also weighed on the STOXX index on Monday. Retail sector fell 2.3%, with JD Sports down 4.7%.

Among individual stocks, Saab rose 2.5% after the company signed a 3.1 billion euro ($3.62 billion) fighter jet deal with Colombia.

British advertising giant WPP's shares rose 11% after a report said it had attracted takeover interest from French rival Havas and some private equity firms.

FLSmidth & Co fell 6.4% after the Danish industrial company announced CEO Mikko Keto would be stepping down and leaving.

Also, the euro zone economy will grow faster than expected in 2025, the European Commission forecast on Monday.

Additionally, euro area benchmark Bund yields dropped, partially reversing gains from the previous session, as markets acknowledged it would take time to accurately gauge the economy while U.S. agencies clear a backlog of data.

(Reporting by Johann M Cherian, Sukriti Gupta, and Tharuniyaa Lakshmi in Bengaluru and Anastasiia Kozlova in Gdansk; Editing by Nivedita Bhattacharjee and Sahal Muhammed)

By Johann M Cherian, Anastasiia Kozlova and Sukriti Gupta