European Stocks Close On Buoyant Note After ECB Policy Announcement

(RTTNews) - European stocks closed on a buoyant note on Thursday after the European Central Bank (ECB), which raised interest rate by 25 basis points today, signaled a pause in rate hikes as soon as September.

Also, the Federal Reserve, which raised interest rates by 25 basis points on Wednesday, as widely expected, downplayed the prospect of a U.S. recession this year.

The pan European Stoxx 600 gained 1.35%. Germany's DAX climbed 1.7% and France's CAC 40 surged 2.05%, while the U.K.'s FTSE 100 gained 0.21%. Switzerland's SMI surged 1.7%.

Among other markets in Europe, Austria, Belgium, Czech Republic, Denmark, Netherlands, Norway, Poland, Russia, Spain, Sweden and Turkiye closed higher.

Finland, Iceland and Portugal ended weak, while Greece and Ireland settled flat.

The ECB raised its interest rates on Thursday, as expected, for the ninth policy session in a row citing the prospect of inflation in the euro area staying too high for too long, while the bank chief Christine Lagarde signaled that policymakers are having an open mind regarding future rate decisions, suggesting that a pause may be on the horizon.

The Governing Council increased the main refinancing rate, or refi, by 25 basis points at 4.25%. The deposit facility rate was raised to 3.75%, which is the highest level in 22 years, and the lending rate was lifted to 4.5%.

"Inflation continues to decline but is still expected to remain too high for too long," the ECB said in a statement. Underlying inflation remains high overall, the bank added.

"We are deliberately data dependent, we have an open mind as to the decisions in September and in subsequent meetings," Lagarde said during the post-decision press conference.

In the UK market, Centrica surged more than 7.5% after it delivered strong operational and financial performance in the first half of 2023.

Relx climbed 4.7%, while Informa, Airtel Africa, Burberry Group, Frasers Group, Smith (DS), Flutter Entertainment, Melrose Industries, Rolls-Royce Holdings, RS Group, WPP, IHG, Smurfit Kappa Group, Whitbread and CRH gained 2 to 4.1%.

St. James's Place plunged 16%. Barclays Group tumbled 5.2% after the bank said it expects to earn less interest in the U.K. due to stubborn inflation and high interest rates.

Endeavour Mining dropped 3.7% and BT Group declined 2.1%. Vodafone Group, Segro, Unite Group, Persimmon, Fresnillo, Shell, Hargreaves Lansdown and M&G also ended notably lower.

In the German market, Infineon, HeidelbergCement, Sartorius, Daimler Truck Holding, SAP, Puma and Siemens gained 3 to 5.6%. Mercedes-Benz gained nearly 4% after lifting its full-year guidance.

Deutsche Post, Siemens Healthineers, Symrise, Deutsche Boerse, BMW, Adidas and Zalando rallied 2 to 3%.

Aixtron soared nearly 14% after the semiconductor-equipment company raised its outlook for 2023 revenue and orders in light of strong demand.

Deutsche Bank ended 3.3% down. Volkswagen shed about 2% after it cut 2023 deliveries outlook. RWE and Covestro also ended notably lower.

In Paris, STMicroElectronics soared nearly 9%. Stellantis, WorldLine, Alstom, Saint Gobain, Hermes International, Capgemini, LVMH, Dassault Systemes, Carrefour and Michelin gained 3 to 5.4%.

BNP Paribas gained 3% after an announcement that it will buy back shares starting next month. Safran climbed nearly 2% after raising its full-year outlook.

Teleperformance tanked 17%. Airbus Group and Unibail Rodamco lost 1.6% and 1.1%, respectively.

UK car production rose for the fifth successive month in June amid strong demand from the export market and better management of global supply chain challenges by manufacturers, data from the Society of Motor Manufacturers and Traders, or SMMT, showed Thursday. Car production grew 16.2 percent year-on-year in June.

UK retailers expect the downturn in sales to gather pace in August, the Distributive Trades Survey from the Confederation of British Industry showed.

A net 25% of retailers said the sales volume fell in July, which was the biggest fall since April 2022. A net 32% said sales are set to fall again next month.