By Nikhil Sharma and Pranav Kashyap

(Reuters) - European shares fell to a one-week low on Monday amid a broader market selloff as global equities came under pressure following U.S. jobs data, which strengthened expectations that the Federal Reserve will approach interest rate cuts cautiously this year.

The pan-European STOXX 600 index closed down 0.5% at 508.71 points, its lowest since Jan 6. It continued its decline after nearly a 1% drop on Friday.

This was triggered by an unexpected acceleration in U.S. job growth in December and a drop in the unemployment rate to 4.1%.

Markets are likely to be particularly sensitive to the upcoming U.S. monthly inflation data on Wednesday, which could be pivotal in determining the likelihood of further Fed rate cuts.

Technology stocks, sensitive to interest rate changes, mirrored declines seen in Wall Street, falling by 1.2%, while the real estate sector lost 1.3% and the heavyweight healthcare sector fell by 1.2%.

Energy stocks were an exception, rising 1.1% as crude oil prices increased due to expanded U.S. sanctions on Russian oil, impacting exports to major buyers like India and China. [O/R]

Concerns about rising inflation, limited prospects for further Fed rate cuts, and discussions around U.S. President Donald Trump's tariff strategies have kept markets uneasy recently.

Uncertainties around U.S. policies may slow global economic growth modestly in 2025, and fuel volatility across global markets, according to major brokerages.

"The big data point on Europe will be next week after Trump's inaugurated... if he (Trump) does pivot towards getting into trade wars and tariffs, that could be a much worse situation for Europe," said Patrick Armstrong, chief investment officer at Plurimi Wealth.

"Until he comes out and really starts putting policy behind the rhetoric, we don't know which direction Europe will go,".

European government bond yields remained elevated, in line with U.S. Treasuries. The yield on the 10-year bund hovered near its highest in over six months. [GVD/EUR]

In the UK, yield on the 30-year gilt jumped to a fresh 27-year high, extending the selloff into a second week. [GB/]

Meanwhile, European Central Bank chief economist Philip Lane indicated that the bank could further ease policy this year, but must strike a balance to avoid triggering a recession or delaying inflation control excessively.

Later this week, inflation data from across Europe, including the UK and Germany, will be closely watched.

Biomerieux added 3.6% after the in-vitro diagnostic company agreed to acquire Norwegian peer SpinChip for 111 million euros ($113.5 million) in cash.

Eurazeo gained 3.7% after Goldman Sachs upgraded its rating on the stock to "buy" from "neutral".

(Reporting by Nikhil Sharma, Shashwat Chauhan and Pranav Kashyap in Bengaluru; Editing by Saumyadeb Chakrabarty, Mrigank Dhaniwala and Toby Chopra)