Europe close: Stocks mixed as investors turn cautious ahead of ECB

5th Mar 2024 16:18

(Sharecast News) - European stocks finished mixed on Tuesday with markets across the continent struggling for direction ahead of a key monetary policy decision from the European Central Bank on Thursday.

The Stoxx 600 closed the day down 0.23% at 496.27, falling for the second straight day after hitting a record high last week, with moderate losses in France and Germany and a flat finish in the UK outweighing small gains in Italy and Spain.

Market chatter on Tuesday suggested some "division" between members of the ECB Governing Council regarding the future steps for interest rates, with markets continuing to expect rates to remain unchanged.

According to an MFS Investment Management analyst quoted by Dow Jones Newswires, ECB president Christine Lagarde will likely be faced with some "uncomfortable" questions in Thursday's press conference. "We think Lagarde will push back on questions about exact timing of cuts and size of future moves," analyst Annalisa Piazza was cited as saying.

In other macro news, business activity in the eurozone's key services sector picked up to a seven-month high in February. The HCOB eurozone Services PMI Business Activity Index came in at 50.2 from January's 48.4, while the composite output index rose to 49.2, its best for eight months.

Meanwhile, figures also showed that producer-price deflation in the eurozone cooled in January, as the drop in energy prices was significantly less than the previous month. Industrial producer prices were 0.9% lower over the month, in line with the monthly decline in December, but down 8.6% on January 2022, compared with a revised 10.7% decrease in December. Economists however were expected smaller declines of 0.1% month-on-month and 8.1% year-on-year.

Thales surges, Spirent jumps

French aerospace, defence and transportation services group Thales saw shares nearly 9% on Tuesday after delivering 2023 results that beat forecasts across the board, with operating profits topping €2bn for the first time in four years. Chair and chief executive Patrice Caine said the board was 'looking ahead to 2024 with optimism, confident in the quality of our fundamentals, the strength of our positioning and the importance of our contribution to the major societal challenges of our time".​

Spirent Communications surged more than 60% after agreeing to be taken over by US communications equipment company Viavi in a £1bn deal, as it revealed a slump in profits. The company admitted it has been "operating against an increasingly challenging market backdrop", and that the offer "recognises the underlying value of Spirent".

Neil Wilson, chief market analyst at Finalto, said: "The move just adds to the sense that the shallow waters of the London market are not enough for tech firms to thrive."

Shares in London-listed Standard Chartered amid a fresh round of M&A chatter. In an 'uncooked alert', markets blog Betaville said people following the situation have heard rumours that StanChart has attracted more takeover interest, allegedly from the Gulf region in the Middle East, possibly Abu Dhabi or Saudi Arabia.