European Stocks Close On Firm Note On Fed Rate Cut Hopes

(RTTNews) - European stocks closed higher on Thursday as the latest data on U.S. consumer price inflation and unemployment claims boosted the prospects of a rate cut by the Federal Reserve next week. Investors also digested the European Central Bank's decision to hold rates.

The ECB left its key interest rate unchanged as expected, and raised the euro area growth projection for this year while inflation forecasts were stable.

The Governing Council, led by ECB President Christine Lagarde, held the deposit rate steady at 2%. The refinancing rate was left unchanged at 2.15% and the marginal lending rate at 2.4%.

"We continue to be in a good place," Lagarde told reporters during the post decision press conference.

The Labor Department report said the U.S. consumer price index climbed by 0.4% in August after inching up by 0.2% in July. Economists had expected consumer prices to rise by 0.3%.

The report also said the annual rate of consumer price growth accelerated to 2.9% in August from 2.7% in July, in line with economist estimates. The annual rate of core consumer price growth in August was unchanged from the previous month at 3.1 percent, in line with economist estimates.

The pan European Stoxx 600 climbed 0.55%. The U.K.'s FTSE 100 surged 0.78%, Germany's DAX gained 0.3% and France's CAC 40 jumped 0.8%, while Switzerland's SMI ended 0.62% up.

Among other markets in Europe, Austria, Belgium, Czech Republic, Finland, Greece, Iceland, Netherlands, Poland, Portugal, Spain and Sweden ended higher.

Denmark, Russia and Turkiye closed weak, while Ireland and Norway ended flat.

In the UK market, BAE Systems rallied 6.3%. Compass Group gained 2.75% thanks to a rating upgrade by Deutsche Bank. Babcock International and ICG also gained about 2.75%.

Rolls-Royce Holdings, Imperial Brands, GSK, Diploma, Relx, Coca-Cola Europacific Partners, British American Tobacco, HSBC Holdings and Pershing Square Holdings gained 1.5 to 2.2%.

Playtech gained 4.3% after the gambling technology company announced strong first-half results and said it is positioned to exceed full-year expectations.

Online ticketing platform Trainline soared nearly 13% following a robust first-half trading statement.

M&G, Entain, Experian, WPP, Segro, The Sage Group, Spirax Group, Diageo, Associated British Foods and Ashtead Group ended with sharp to moderate losses.

In the German market, Covestro jumped nearly 8%. Bayer, Heidelberg Materials, Rheinmetall and Deutsche Bank gained 2 to 3%.

Commerzbank, Volkswagen, Fresenius Medical Care, Porsche, BASF and Daimler Truck Holding also closed notably higher.

Sartorius tumbled nearly 3%. Qiagen, SAP and Siemens Energy also closed weak.

In the French market, Stellantis soared more than 9% after CEO Antonio Filosa painted a stronger profitability and cash-generation outlook at a conference.

Thales, Societe Generale, Airbus, Saint Gobain, Eurofins Scientific, BNP Paribas, Air Liquide, Safran and Renault gained 1.5 to 4%.

Kering gained about 2.5%. Kering announced on Wednesday that it will not fully buy Italian fashion brand Valentino until at least 2028, pushing back the execution of an expensive deal that has been weighing on the heavily indebted group.

Sanofi found support after its SAR402663 earned fast track designation in the U.S. for neovascular age-related macular degeneration.

Vivendi, L'Oreal, TotalEnergies, Pernod Ricard, Capgemini and LVMH closed weak.