Europe close: Stocks finish mixed as ECB holds steady

(Sharecast News) - European stocks finished mixed on Thursday as investors digested the latest monetary policy meeting from the European Central Bank, which kept the door open to a possible interest-rate cut in September. Markets in London, Paris, Milan and Madrid closed slightly higher, but Frankfurt's main benchmark finished with losses, pulling the pan-European Stoxx 600 into the red by the end of play. The Stoxx 600 fell 0.16% to 514.01 to extend its current losing streak to four straight sessions.

As expected, the ECB held interest rates steady, though central bank president Christine Lagarde indicated that monetary easing could be possible at its next meeting. In its policy announcement, the ECB said: "While some measures of [underlying inflation] ticked up in May owing to one-off factors, most measures were either stable or edged down in June."

"After cutting rates last month for the first time in almost five years, the central bank has now held them firm at 3.75% as it keeps a close eye on inflation," said Dan Coatsworth, investment analyst at AJ Bell.

"It's wrong to assume that rate cuts will be a one-way ticket back towards rock-bottom levels. Instead, expect a slow burn which could easily move sideways for months at a time before the next leg down. Even then, the general direction of travel isn't guaranteed to be a descent."

In other news, UK wages grew at their slowest pace in nearly two years in the three months to May. Annual pay excluding bonuses was up 5.7%, down from 6% growth in the previous three-month period. This was in line with economists' expectations and marked the slowest pace of growth since September 2022.

Construction output in the eurozone declined for third month in a row in May, with the annual change showing its steepest rate of decline in more than three years, according to Eurostat. Construction output was down 0.9% over the month, worsening from the 0.4% decline in April, coming in 2.4% lower than last May.

Market movers

Swedish carmaker Volvo raced ahead after reporting second-quarter profits that impressed the. market, despite the company paring its sales growth targets due to EU tariffs on electric vehicles from China.

Italian-French eyewear maker EssilorLuxottica rose strongly on reports that Meta is in talks to buy a 5% stake in the firm as the social-media giant looks to deepen its ties with the company that makes its Ray-Ban Meta smart glasses.

Getinge shares surged as the Swedish medical equipment maker posted Getinge reported better-than-expected second-quarter earnings, as its order intake grew despite long term problems with its product packaging and heart products.

Nokia's stock was under heavy selling pressure after the Finnish telecoms group posted its lowest quarterly net sales figure in nearly a decade and reported a big drop in profit as investments in 5G equipment waned.