Europe close: Markets turn weaker in late trading

(Sharecast News) - European markets closed lower on Thursday, having reached record highs in the morning as investors digested a fresh batch of corporate earnings and economic data, even as Asian markets extended their rally.

Sentiment was initially buoyed by a �9.9bn takeover of Schroders by US investment manager Nuveen, helping the UK benchmark touch fresh highs earlier in the session.

"The FTSE 100 eked out a new record intraday high at 10,530 as takeover activity gave a boost to the market," noted Dan Coatsworth, head of markets at AJ Bell.

The pan-European Stoxx 600 slipped 0.61% to 617.81 by the close, however.

Germany's DAX lost 0.11% to 24,827.83 while France's CAC 40 advanced 0.33% to 8,340.56, as the UK's FTSE 100 slipped 0.67% to 10,402.44.

Coatsworth added that the apparent disconnect between growth and equity performance should not be overstated.

"The UK economy is barely growing yet the stock market hitting new highs might sound an odd pairing.

"It's important to remember the FTSE 100 is not a direct representation of the UK economy.

"Approximately three quarters of its members generate their earnings overseas, and so what's happening with GDP only has limited relevance to the direction of the stock market, although it can affect investor sentiment."

He noted that "some of the more domestic-facing names on the FTSE 100 were out of favour, including housebuilders and property stocks."

UK economy grows at the lower end of expectations

In economic news, the UK economy grew by 0.1% in the fourth quarter of 2025, unchanged from the third quarter and in line with the lower end of expectations, according to the Office for National Statistics.

"December's UK GDP growth met expectations at 0.1% month-on-month, but November's revision down by 0.1% led to a slight quarter-on-quarter miss - 0.1% versus 0.2% expected," said Patrick Munnelly, market strategy partner at TickMill.

"Year-on-year growth slowed to 1.0%, down from 1.2% in the third quarter, and further to 0.7% based on monthly data."

He added that "investment turned negative - -0.1% versus +0.1% - with business investment notably weak - -2.7% quarter-on-quarter - though the broader trend remains positive."

Growth was driven by a 1.2% increase in production, including a 0.9% rise in manufacturing, but that was offset by a 2.1% fall in construction, its largest drop in more than four years, and flat output in the services sector, marking the first time in two years that services GDP failed to grow.

In December, GDP rose 0.1% following a downwardly revised 0.2% increase in November.

For 2025 as a whole, GDP was estimated to have increased by 1.3%, up from 1.1% in 2024.

Liz McKeown, director of economic statistics at the ONS, said there had been growth across all the main sectors during 2025.

"Initial estimates show GDP per head was up on the previous year, despite it contracting slightly in each of the last two quarters," she added.

Danni Hewson, head of financial analysis at AJ Bell, said "the service sector has struggled to deal with reduced confidence, which was exacerbated by the months of speculation and pitch rolling ahead of last year's unusually late Budget.

"'Building back Britain' has been at the heart of the government's plans, but rhetoric and the promise of change are not enough when they are undermined by instability and questions."

The UK housing market meanwhile showed further signs of stabilisation in January, according to the latest residential survey from the Royal Institution of Chartered Surveyors.

Its house price balance improved to -10 from -14 in both December and November and -19 in October.

Buyer enquiries also strengthened, with the balance rising to -15 from -21, while agreed sales, at -9, were the least negative since June.

While expectations for the next three months fell sharply from 22 to 4, reflecting "short-term caution", the 12-month expectations balance rose to 35, the strongest reading since December 2024, and 43% of respondents expect house prices to rise over the coming year.

"There are early signs that market conditions may be improving after a challenging period, although activity levels are still subdued, meaning any recovery is likely to be gradual," said Simon Rubinsohn, RICS chief economist.

"Whether this tentative improvement develops into sustained momentum will depend heavily on the trajectory of mortgage rates and broader macro confidence over the coming months."

Across the Atlantic, initial jobless claims in the US fell by 5,000 to 227,000 in the week ended 7 February, compared with forecasts for 222,000 and the prior week's upwardly-revised 231,000, which was driven by severe winter weather.

Continuing claims rose to 1.86 million, above expectations of 1.85 million, while the four-week moving average increased by 7,000 to 219,500.

The advance seasonally-adjusted insured unemployment rate was unchanged at 1.2% for the week ended 31 January.

Schroders jumps on offer from Nuveen, Adyen in the red

In equities, Schroders jumped 28.88% after Nuveen, part of the Teachers Insurance and Annuity Association of America, offered 612p per share, comprising 590p in cash - a 29% premium to Wednesday's closing price - plus permitted dividends of up to 22p per share.

"Ding-dong, the takeover bell is rung once again as London stands to lose a veteran of the UK stock market," Coatsworth said.

"Schroders has been listed in London since 1959 and is among the biggest UK-quoted asset managers."

He added that "the 34% bid premium including dividends is below the 44% average year-to-date and there may be grumbles from shareholders the takeout price is not generous."

Sweden's Embracer Group surged 18.66% after reporting quarterly operating profit above analysts' estimates, while Siemens gained 0.29% after raising its profit outlook and highlighting growth opportunities in the industrial AI sector.

EssilorLuxottica rose 4.19% and Herm�s added 2.55% following results, but Dutch payments processor Adyen slumped 21.87% on weaker-than-expected transaction volumes and cautious guidance despite revenue growing by more than a fifth in the second half of 2025.

The Magnum Ice Cream Company fell 16.37% after reporting a 48% drop in full-year profit.

Coatsworth said the group "has seen its share price melt faster than a Cornetto left in the sun after its maiden results as an independent entity," adding that "investors were still unimpressed by the big drop in annual profit and cash flow."

Mercedes-Benz Group eased 1.45% after the carmaker said its 2025 operating profit fell 57% amid competition in China and the impact of global tariffs.

Reporting by Josh White for Sharecast.com.