European Markets Close On Firm Note After ECB, BoC Rate Decisions

(RTTNews) - European markets closed on a firm note on Thursday after staying somewhat subdued till a little past noon.

The Bank of England's decision to lower interest rates by 25 basis points, expectations of more monetary easing by the Federal Reserve after data showed a smallar-than-expected increase in U.S. consumer price inflation helped underpin sentiment.

The European Central Bank (ECB) left its interest rate unchanged as widely expected, and appeared to signal no more reductions in rates anytime in the near futures.

The central banks of Sweden and Norway too left their interest rates unchanged.

Data showing an improvement in French manufacturing confidence in the month of December aided sentiment to some extent.

The pan European Stoxx 600 climbed 0.96%. The U.K.'s FTSE 100 gained 0.65%, Germany's DAX moved up 1%, and France's CAC 40 closed up by 0.8%, while Switzerland's SMI settled with a gain of 0.82%.

Among other markets in Europe, Belgium, Finland, Greece, Ireland, Netherlands, Poland, Portugal, Spain, Sweden and Turkiye closed higher.

Czech Republic, Denmark and Iceland ended weak, while Norway closed flat.

The BoE's Monetary Policy Committee (MPC) reduced its interest rate from 4.00% to 3.75%, a near three-year low, today. The MPC voted five to four in favour of lowering borrowing costs down to their lowest levels since February 2023.

The BoE Governor Andrew Bailey said that the MPC still thinks rates are on a gradual path downward.

The ECB today left interest rates unchanged, as ?expected, and ?took a more positive view on the regional economy.

The ECB raised several of its growth and inflation projections for the EU bloc, in a move that likely closes the door to further rate cuts in the near term.

In the UK market, Whitbread surged 6.3%. Fresnillo climbed 4.4%, Rolls-Royce Holdings, Rentokil Initial, Melrose Industries, Smiths Group, JD Sports Fashion, Ashtead Group, Glencore and BAE Systems gained 2 to 4%.

Endeavour Mining, Compass Group, 3i Group, Next, Land Securities, Scottish Mortgage, Babcock International, IMI, Howden Joinery Group and Polar Capital Technology Trust also posted strong gains.

Bunzl closed down by about 2.5%. United Utilities, BP, GSK, Pershins Square Holdings and Coca-Cola Europacific Partners also ended notably lower.

In the German market, Siemens Energy and Deutsche Bank gained 3.7% and 3%, respectively. Deutsche Boerse, Heidelberg Materials, Siemens, Rheinmetall, Continental, Adidas, Zalando, SAP, Infineon and MTU Aero Engines moved up 1 to 2%.

In the French market, Eurofins Scientific climbed more than 4%. Safran gained 2.7%, while Bureau Veritas, Bouygues, Thales, Schneider Electric, Saint Gobain, Hermes International, ArcelorMittal, Airbus, Unibail Rodamco, Euronext, Societe Generale and Danone climbed 1 to 2%.

Renault lost nearly 2%. Accor ended 1.01% down.

Kering closed lower by about 0.9%, while Veolia Environment and AXA ended modestly lower.

Data from the statistical office INSEE showed the confidence among French manufacturers rebounded strongly in December to the highest level in over one-and-a-half years, climbing to 102.0, from 98.0 in November. Economists had expected the index to remain stable at 98.0.

The rebound at the end of the year was mainly evident in the manufacturing of other transport equipment, the survey said.

The overall business confidence index, which comprises the responses of business leaders from sectors such as manufacturing, construction, services, retail trade, and wholesale trade, strengthened to 99 in December from 98 in November. Meanwhile, the employment climate index declined to 95 from 96.