European stocks experienced a downturn on Thursday following the U.S. Federal Reserve's decision to maintain steady interest rates while signaling that inflation remains too high to consider cutting rates.
In the euro zone, European Central Bank Governing Council member Joachim Nagel emphasized that consumer price growth remains stubborn, suggesting that lowering borrowing costs isn't imminent. Further commentary was anticipated from Governing Council Member Madis Muller later in the session.
According to Eurostat, the euro zone's industrial output edged down by 0.1 percent in April from the previous month. Concurrently, Germany's wholesale prices continued their decline in May, though at a slower rate, as reported by Destatis. Wholesale prices in Germany saw an annual decrease of 0.7 percent in May, an improvement from the 1.8 percent drop in April.
The pan-European STOXX 600 index fell by 0.6 percent to 520, following a 1.1 percent rally on Wednesday. Germany's DAX dipped 0.7 percent, France's CAC 40 dropped 0.8 percent, and the U.K.'s FTSE 100 was down 0.4 percent. Bond yields in the euro zone rose, with the yield on the German 10-year bund trading at 2.551 percent.
Automakers BMW, Renault, Mercedes Benz, and Volkswagen saw declines of 2-3 percent after the European Union announced increased tariffs on electric vehicles imported from China, raising fears of a potential trade war.
In corporate news, BT Group's shares surged by 2.7 percent in London following an acquisition of a 3.2 percent stake by Latin America's richest individual, Carlos Slim. Health and safety device manufacturer Halma saw its shares soar by 10.5 percent after posting robust annual results.
Conversely, homebuilder Crest Nicholson's shares plummeted by 8.4 percent following a profit warning. Money transfer company Wise experienced a steep decline of 15 percent after predicting slower income growth for fiscal 2025 compared to fiscal 2024.
In Paris, shares of French rolling stock manufacturer Alstom SA tumbled by 3.1 percent. The company completed a share capital increase worth 1 billion euros, including issue premium, as part of a larger 2 billion euros deleveraging plan previously announced.
