FRANKFURT: European shares made broad-based gains on Thursday, with lower-than-expected US inflation strengthening hopes for Federal Reserve interest rate cuts in 2026 and the European Central Bank taking a more positive view of the economy after keeping rates on hold.
The pan-European STOXX 600 ended up 0.93 percent at 585.29, after two straight sessions of declines. Major regional exchanges were broadly higher, with Germany’s DAX and France’s CAC 40 adding 1 percent each.
The ECB kept interest rates steady and took a more positive view on a euro zone economy that has shown resilience to global trade shocks, likely cementing investor expectations of no change to interest rates.
The ECB kept its options open, reiterating it would set rates “meeting-by-meeting” based on economic data, following policymaker Isabel Schnabel’s hint last week that the next move could be a rate hike.
“The ECB policy statement didn’t change very much. They raised economic growth forecasts and they see relatively low inflation, that’s basically sort of a rate cut. That’s as good a news as you can get from a central bank,” said Steve Sosnick, chief strategist at Interactive Brokers. Across European sectors, banks rose 1.1 percent, reversing losses earlier in the session. Financial services jumped 2.2 percent. Heavyweight industrial stocks rose 1.8 percent.
Retail companies rose 2.1 percent, with budget fashion group H&M up 3.6 percent. Consumer goods company Nestle also gained.
Energy companies were up 0.7 percent, as oil prices rose. “It’s quite surprising that ... despite the trade war, inflation, recession, economic slowdown concerns how good 2025 has been,” said Marija Veitmane, head of equity research at State Street.
“Allocation to stocks was close to decade high and we had lots of shocks, but the stock market is even higher right now than it was at the start of the year and investor positions are even higher in terms of allocation to risk.”
In London, the FTSE 100 was flat after the Bank of England cut interest rates earlier in the day, but the central bank signalled that the already gradual pace of lowering borrowing costs might slow further.
Equity indexes in Sweden and Norway remained flat after their respective central banks maintained interest rates.
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