Europe close: Stocks broadly higher after central bank meetings

(Sharecast News) - European stocks were higher across the board on Thursday, though regional performances varied after a trio of central bank meetings, which saw both the US and Norway cut rates and the UK hold steady.

The pan-European Stoxx 600 finished 0.8% higher at 555.01, with Frankfurt stocks surging 1.4%, and gains of around 0.9% in Paris and Milan, tempered by tepid performances in London (+0.2%) and Madrid (+0.3%).

The positive finish was helped in the afternoon by strong starts on Wall Street where the S&P 500 and Nasdaq jumped 0.7% and 1.2% respectively to both hit new record highs.

Norges Bank cut its policy rate on Thursday by 25 basis points to 4% as it signalled a more gradual easing path going forward. Governor Ida Wolden Bache said that while the job to bring inflation back to target had not been completed, "a cautious easing of monetary policy will pave the way for returning inflation to target without restraining the economy more than needed".

Markets were also digesting Wednesday evening's move by the Federal Reserve to also cut the Federal Funds Rate by 25bp to a range of 4.0-4.25%, as expected. However, one lone policymaker - Donald Trump's newest FOMC appointee, Stephen Miran - called for a 50bp cut. The Fed said to expect further rate reductions over the next two years, with the market already pricing in two further 25bp cuts before the end of 2025.

Meanwhile in London, the Bank of England left the cost of borrowing unchanged, as widely expected, on the back of persistent inflation. The rate-setting Monetary Policy Committee voted by a majority of seven-to-two to leave interest rates at 4%. The MPC also voted by seven-to-two to slow its quantitative tightening bond-selling programme, from �100bn to �70bn, to curb rising bond yields.

In other central bank news, the vice president of the European Central Bank said on Thursday that policymakers are following a "very prudent" approach after last week's decision to hold interest rates, suggesting that a further rate cut in the current easing cycle could still be on the table. "We do not know if the easing cycle is over," said Luis de Guindos in a livestreamed MNI Connect discussion in London. "If circumstances change, then we will change."

In economic data on Thursday, construction output across the eurozone rebounded slightly in July, according to statistics from Eurostat, bouncing back after two months of solid declines. Seasonally adjusted production in construction increased 0.5% over the single-currency region in July, only partially offsetting the 0.7% contraction in June and the 2.1% slump in May.

Market movers

Novo Nordisk shares were up as the Danish pharma giant that late-stage trial results for its once-daily obesity pill showed "significant" weight reduction and tolerability in line with its blockbuster Wegovy injection.

Puma shares slipped after a 17% surge in late Wednesday trade on a report that Authentic Brands CEO Jamie Salter and private equity firm CVC's German head Alex Dibelius both expressed interest in the 29% stake held by the Pinault family, paving the way for a potential bidding war.

Swiss pharma giant Roche edged higher after striking a deal to buy American clinical-stage biopharmaceutical company 89bio for up to $3.5bn.