Europe stocks pare losses following European Central Bank interest rate cut

European stock markets pared their losses to close nearly flat after the European Central Bank cut interest rates.

The pan-European Stoxx 600 index provisionally closed 0.1% lower. Regionally, the U.K.'s FTSE 100 was little changed for the session, while Germany's DAX and France's CAC 40 fell by 0.5%.

— Ganesh Rao

Euro zone bond yields pared gains shortly after the interest rate cut announcement, with Germany's 10-year yield — the benchmark for the bloc — just below the flatline after earlier gains of more than one basis point.

Yield moves were largely muted following their recent spell of volatility spurred by tariffs. The German 2-year dipped to the flatline from a gain of three basis points. France's 2-year yield was nearly one basis point higher, slightly below earlier gains, while its 10-year yield also fell flat.

"All else equal, the ECB believes monetary policy will need to be more accommodative than previously expected," Andrew Kenningham, chief Europe economist at Capital Economics, said in a note.

The ECB on Thursday cut interest rates by 25 basis points, as was widely expected ahead of the decision.

Markets had been pricing in an around 94% chance of such a cut, and an around 6% chance of a bigger, 50 basis point reduction.

This takes the central bank's deposit facility rate, its key rate, to 2.25% — down from highs of 4% in mid-2023.

— Sophie Kiderlin

The European Central Bank is widely expected to trim interest rates for the third time this year as global tariff tensions and uncertainty threaten the euro zone's economic growth.

As of Wednesday, markets were last pricing in a roughly 94% chance of a quarter-point interest rate cut from the central bank and a close to 6% likelihood of a larger, 50-basis-point reduction according to LSEG data.

A quarter-point cut would take the ECB's deposit facility rate, its key rate, to 2.25% — down from a high of 4% toward the middle of 2023.

The series of relatively fast-paced interest rate cuts have played out as inflation in the euro area has consistently sat below 3%, recently closing in on the ECB's 2% target. Regional economic growth has meanwhile been lackluster.

Read the full story here.

— Sophie Kiderlin

Spanish lender Banco Santander has dethroned Swiss giant UBS as continental Europe's largest bank by market capitalization, as U.S. tariffs ripple through the region's banking sector.

UBS had a market cap of 79.5 Swiss francs ($97.23 billion) as of the Wednesday close, according to FactSet data, with Banco Santander at 91.3 billion euros ($103.78 billion).

Europea banks

It comes as Santander and UBS' shares have diverged over recent months, with the Swiss lender shedding 17.2% in the year to date, while Santander has gained nearly 35%.

Read more here.

— Ruxandra Iordache

European stocks dipped in early deals Thursday ahead of the Easter trading break, with the regional Stoxx 600 index down 0.3% at 8:40 a.m. in London.

The U.K.'s FTSE 100 fell 0.42%, coming off a five-session winning streak that has defied broader market losses. France's CAC 40 was down 0.36%.

Following a positive open, Germany's DAX was last 0.1% lower.

Stoxx 600 index.

Luxury group Hermès reported higher revenue as U.S. sales grew strongly in the first quarter, though slightly missed analyst expectations.

Revenue rose 7% year-on-year on a constant currency basis to 4.1 billion euros ($4.65 billion). That was just shy of a 7.6% consensus estimate cited by Citi analysts.

Citi called the results "a respectable outcome."

Growth was driven by an 11% hike in sales in the Americas, along with a 13% rise in Europe excluding France, 14% in France, 17% in Japan and 14% growth in regional sales including the Middle East.

The Birkin bag-maker's key leather goods and saddlery division grew 10%, while watches tumbled 10% and perfume and beauty was flat.

"In the medium-term, despite the economic, geopolitical and monetary uncertainties around the world, the group confirms an ambitious goal for revenue growth at constant exchange rates," it said in a statement.

Hermès earlier this week overtook fellow French behemoth LVMH as the world's largest luxury firm by market capitalization, after the latter reported an unexpected sales decline for the first quarter.

As of Wednesday, Hermès' value stood at 249.5 billion euros to LVMH's 242.7 billion euros, according to FactSet data.

Hermes share price.

Shares of Siemens Energy popped 6.5% in premarket deals, according to Reuters, after the power firm upgraded its outlook for fiscal 2025 after the market close on Wednesday.

The company said it expected comparable revenue growth of 13% to 15%, up from prior guidance of 8% to 10%. It now sees a profit margin before special items of 4% to 6%, up from 3% to 5%, and net income of "up to" 1 billion euros ($1.13 billion), previously guided to be "around break-even."

The preliminary quarterly results also showed revenue up 20.7% year-on-year to 9.96 billion euros and profit of 615 million euros. Both were ahead of company-compiled consensus expectations of 9.3 billion and 372 million, respectively. 

After languishing since its spin-off from parent company Siemens in 2020 amid troubles in its wind turbine unit, Siemens Energy saw a stunning share rally through 2024 on expectations of increased electricity demand to fuel the artificial intelligence boom.

However, it was rocked earlier this year by debate over whether Chinese startup DeepSeek could create AI models more cheaply and with less-powerful chips. The New York Times reported Wednesday that the White House was considering blocking DeepSeek from buying U.S. tech and barring Americans from accessing its services.

Siemens Energy share price.

U.S. importers are receiving an increase in canceled sailings by freight ships coming out of China, resulting from a pullback in orders driven by President Donald Trump's tariff policies.

Freight company HLS Group recorded a total of 80 canceled sailings out of China, and wrote in a note to clients that carriers have started to suspend or adjust transpacific services amid the U.S.-China trade war. The impact of the diminished freight container traffic to North America will affect links in the economy and supply chain, including the ports and logistics companies moving the freight.

China now faces up to a 245% tariff on imports to the U.S., the White House said Tuesday, although that excludes several electronic devices after Trump's latest tariff exemption. Beijing said last week it raised its levies on U.S. goods to 125%.

Read more here for what freight experts told CNBC.

— Lori Ann LaRocco, Pia Singh

European markets are expected to open in negative territory Thursday.

The U.K.'s FTSE 100 index is expected to open 39 points lower at 8,230, Germany's DAX down 48 points at 21,255, France's CAC 38 points lower at 7,289 and Italy's FTSE MIB 97 points lower at 35,061, according to data from IG.

Traders are awaiting the latest monetary policy decision from the European Central Bank. Earnings come from ABB, OVH, Pernod Ricard, Hermes, Deliveroo, Sainsbury's, Forvia and L'Oreal.

— Holly Ellyatt