* Deutsche Telekom rises on T-Mobile US bid speculation
* Telecoms is best-performing European equity sector
* Backdrop of M&A activity keeps European shares steady
* U.S jobs data eyed at 1230 GMT
* FTSEurofirst 300 edges down 0.1 pct
By Sudip Kar-Gupta
LONDON, May 2 (Reuters) - Signs of takeover activity in the telecoms sector kept European stock markets steady on Friday, although many investors were reluctant to add big positions before U.S. jobs data later in the day.
The pan-European FTSEurofirst 300 index, which last month hit its highest level since June 2008, was off just 0.1 percent at 1,353.65 points in mid-session trading.
The euro zone's blue-chip Euro STOXX 50 index dipped 0.3 percent to 3,187.72 points. Both the FTSEurofirst 300 and the Euro STOXX 50 have gained more than 2 percent since the start of 2014.
Equity markets have drifted higher over the last week, propped up by signs of blockbuster merger and acquisition (M&A) deals.
On Friday, Deutsche Telekom rose 3 percent, after Reuters reported that U.S. rival Sprint had met with banks ahead of a planned bid for T-Mobile US, which is 67 percent owned by Deutsche Telekom.
French telecoms group Iliad and conglomerate Bouygues also rose, by 4.7 percent and 2.5 percent respectively, due to ongoing speculation of a tie-up between the two.
JP Morgan Cazenove on Friday raised its rating on Bouygues to "overweight" from "neutral", factoring in a 50 percent probability of a combination with Iliad, and the STOXX Europe 600 Telecoms Index was up by 1.7 percent - making it the best-performing equity sector in Europe.
"There's a little bit of friction ahead of the U.S. jobs data, but the newsflow on the M&A front is helping support markets," said Clairinvest fund manager Ion-Marc Valahu.
U.S. drugmaker Pfizer also raised its offer for UK rival AstraZeneca to 63 billion pounds ($106.44 billion) on Friday, but was promptly rejected.
French company Alstom faces takeover interest in its power business from General Electric and Siemens .
AstraZeneca shares were down by 0.7 percent to 47.87 pounds after the company rejected Pfizer's new indicative offer of 50 pounds per share and some traders said Pfizer might have to raise its offer again up to the 55 pound level.
"Mid-50s is a level that Astra would be far more comfortable with," said Dafydd Davies, senior trader at London-based firm Prime Wealth Group.
AstraZeneca's share price has surged by around 26 percent since news of Pfizer's bid interest first emerged in late April.
U.S. non-farm payrolls data, due to be published at 1230 GMT, will give an indication of the health of the world's biggest economy and the outlook for the global economy.
A Reuters survey forecast that non-farm payrolls probably increased by 210,000 jobs this month, up from a 192,000 gain in March.
"Non-farm payrolls should come in line with expectations. I don't see equities coming off by much until I see a big move in interest rates," said Valahu. ($1 = 0.5919 British pounds)
Europe bourses in 2014: link.reuters.com/pap87v
Asset performance in 2014: link.reuters.com/gap87v
Today's European research round-up (Additional reporting by Atul Prakash; Editing by Susan Fenton)