(Sharecast News) - European stocks were off earlier lows but still in the red by midday on Thursday, weighed down by weak performances from auto makers and Societe Generale, as investors mulled the latest policy announcement from the Bank of England.

The benchmark Stoxx 600 index was down 0.2%, Germany's DAX was 0.7% weaker and France's CAC 40 was 0.8% lower.

The BoE announced its first rate cut in four years at midday, to 5% from 5.25%, as widely expected. Rates had been at a 16-year high of 5.25% since August 2023.

The Monetary Policy Committee voted five to four for the rate cut.

On Wednesday, the US Federal Reserve left its benchmark rate at between 5.25% and 5.50% as expected. However, chair Jerome Powell indicated that the central bank would be prepared to loosen monetary policy at its next meeting if price pressures continue to ease.

"A reduction in the policy rate could be on the table as soon as the next meeting in September," he said. "We're getting closer to the point at which it'll be appropriate to reduce our policy rate, but we're not quite at that point."

On home shores, the latest eurozone manufacturing survey was in focus, as it showed the sector remained in contraction territory in July.

HCOB's final manufacturing purchasing managers' index for the sector was unchanged from June at 45.8, coming in a touch higher than the preliminary estimate of 45.6.

The manufacturing PMI output index, meanwhile, printed at 45.6 in July compared to 46.1 the month before, which was a seven-month low but just above the preliminary reading of 45.3.

Dr. Cyrus de la Rubia, chief economist at Hamburg Commercial Bank, said: "The widely held belief that the eurozone's recovery would pick up speed in the second half of the year is taking a hit, thanks to the latest HCOB PMI index for the manufacturing sector. Earlier this year, it looked like the sector might gradually climb out of the production slump it had been in for months, but the doubts that surfaced in June have been intensified by an accelerated decline in production in July. Given this weak data, we'll probably need to lower our GDP growth forecast for the year from 0.8%.

"The weak demand situation has gotten even worse since June, meaning rising input prices can't be passed on to customers so easily. This means shrinking profit margins for businesses. If this trend keeps up, it spells trouble for investment and future growth, as companies will likely start cutting costs. On the flip side, the European Central Bank might have mixed feelings about this. Sure, rising input prices could push inflation up, but falling profit margins might help keep that inflationary pressure in check."

In corporate news, BMW was under the cosh after the car maker posted a drop in second-quarter earnings, with Volkswagen and Daimler Truck also lower after results.

Elsewhere, Societe Generale tumbled after cutting the outlook for its French retail bank.

On the upside, drinks and brewing company AB InBev fizzed higher after its second-quarter profits beat expectations.

Shell gushed higher as the oil giant reported better-than-expected earnings for the second quarter of $6.3bn and announced a $3.5bn share buyback.

Rolls-Royce rallied as it lifted its full-year profit guidance, hailing a strong first half, and said it was reinstating dividends.