European Stocks Decline Amid Fed Rate Hike Bets, Geopolitical Tensions

(RTTNews) - European stocks closed weak on Thursday amid concerns over geopolitical tensions and uncertainty about Fed interest rates. Upbeat quarterly earnings and guidance from U.S. chip maker Nvidia triggered strong buying in the tech sector, but stocks from most of the other sectors struggled to find support.

A Fed rate hike by year-end looks likely following Wednesday's data showing firmer-than-expected U.S. inflation. The U.S. Commerce Department said its personal consumption expenditures (PCE) price index rose by 0.2% in July after edging down by 0.1% in June. Economists had expected prices to inch up by 0.1%.

Meanwhile, the European Central Bank's meeting Accounts suggested that a rate hike could be needed in September, with policymakers highlighting upside risks to inflation and downside risks to growth stemming from the Middle East.

Investors now await Fed Chair Kevin Warsh's speech at Jackson Hole on Friday for further clues on the central bank's likely moves in upcoming policy meetings.

Fitch's review of France's sovereign credit rating, which is due tomorrow, and French political uncertainty weighed as well on sentiment.

The pan European Stoxx 600 ended down 0.69%. The UK's FTSE 100 and France's CAC 40 closed lower by 0.79% and 1.68%, respectively. Germany's DAX climbed 0.31%. Switzerland's SMI settled 1.09% down.

Among other markets in Europe, Austria, Belgium, Czech Republic, Denmark, Greece, Ireland, Netherlands, Norway, Poland, Portugal, Russia, Spain, Sweden and Türkiye closed with sharp to moderate losses.

Finland and Iceland bucked the trend and ended slightly higher.

In the UK market, Entain dropped about 3.7%. LondonMetric Property, Games Workshop, GSK, Coca-Cola HBC, Coca-Cola Europacific Partners, Lloyds Banking Group, British American Tobacco, Persimmon, National Grid, Shell, Weir, Standard Chartered and Severn Trent lost 1.6%-2.7%.

Prudential ended down by 2.5% after reporting a slowdown in new business profit growth.

Computacenter soared nearly 8%. The Sage Group climbed nearly 4%. LSEG, Relx, Experian, Polar Capital Technology Trust, Halma, Fresnillo, Metlen Energy & Metals, Compass Group and Pearson gained 1%-3.4%.

In the German market, SAP jumped 5.5%. BMW gained nearly 4%. Infineon, Volkswagen, Zalando, Rheinmetall, Porsche Automobil Holding and Mercedes-Benz moved up 2%-3.6%.

Scout24, Adidas, Qiagen, Vonovia and Merck also ended notably higher.

Commerzbank, Deutsche Telekom, MTU Aero Engines, Continental, E.ON, Allianz, Heidelberg Materials and Bayer closed down by 1%-2.7%.

In French market, Renault closed stronger by 4.3%. Capgemini, STMicroelectronics, Stellantis and Dassault Systemes gained 2%-3%. Teleperformance and Hermes International moved up 1.5% and 1%, respectively.

Financial stocks Societe Generale, BNP Paribas and Credit Agricole shed about 5%, 4.7% and 4%, respectively.

Pernod Ricard closed lower by about 4.5%. The spirits and wine group reported a 3.9% decline in annual sales for fiscal 2026, citing weak demand in China and the United States.

Orange, Veolia Environment, Vinci, Bouygues, Saint-Gobain, Engie, Unibail Rodamco, Michelin, Carrefour, Safran, Accor, Danone, TotalEnergies, LVMH, Publicis Groupe, Sanofi, Thales, Bureau Veritas and Airbus also ended notably lower.

In economic news, German consumer confidence is set to improve in September driven by income expectations and willingness to save, results of the NIM Consumer Climate powered by GfK showed. The forward-looking consumer sentiment index rose to -26.6 in September from -29.4 in August. The score was seen at -29.6.

Data from the statistical office INSEE showed France's producer prices increased for the first time in four months in July, rising 1.1% on a monthly basis, reversing a 0.4% drop in June. The rebound reflected broad-based price pressures across multiple sectors.

On a yearly basis, producer price inflation in the French market rose to 3.4% in July from 2.8% in June.

Loans to the euro area private sector increased at a faster pace in July. Adjusted loans to the private sector grew 4.1% year-on-year in July, faster than the 3.8% increase in June, data from the European Central Bank showed. This was the quickest growth in three years. Broad monetary aggregate M3 grew at a slightly faster pace of 3.4% after rising 3.3% in June, as expected.

Data from the Society of Motor Manufacturers and Traders Limited (SMMT) showed UK car production fell 10.6% year-on-year to 61,767 units in July, following a 1.3% decline in June, driven by weaker export demand and earlier scheduling of routine summer maintenance shutdowns.