Top European stocks have fallen after the central bank decided to keep its key interest rate steady for another month, as it awaits stronger signs that inflation is firmly under control.
London’s FTSE 100 took a turn for the worse in the afternoon following the eurozone rates decision, with banks and financial services stocks among those marking the biggest losses.
It closed down 37.41 points, or 0.47%, at 7,923.8.
In Frankfurt, the Dax was down 0.82%, and in Paris, the Cac 40 closed 0.27% lower.
Despite the decision to hold interest rates steady, the European Central Bank’s (ECB) president Christine Lagarde suggested that a rate cut was now on the table.
She said that if incoming data confirmed the decline of inflation, “it would be appropriate to reduce the current level of monetary policy restriction”.
Carsten Brzeski, the global head of macro at ING, said: “Even if the policy announcement does not explicitly mention June as the moment for a first rate cut, we think that today’s meeting should mark the final stop before the cut.
“In fact, the ECB has gone through a very gradual transition of its communication since December, turning from hawkish to dovish.
“The faster-than-expected drop in headline inflation, as well as anaemic growth, have opened the door for some rate cuts.”
Over in the US, the S&P 500 was flat and the Dow Jones was down about 0.35% by the time European markets closed.
It was a weaker session for the euro amid the expectation of eurozone interest rates coming down.
The pound was up about 0.15% to 1.169 euros, and was down about 0.1% to 1.253 US dollars.
In company news, shares in Revolution Bars Group soared by more than 50% after the pub chain announced restructuring plans and a fundraise of up to £12.5 million with the backing of hospitality investor Luke Johnson.
It also said it was considering putting itself up for sale if that would be more beneficial for shareholders.
The firm’s shares have tumbled to historic lows in recent months, but closed 54% higher on Thursday.
Shares in Mears moved higher after the housing services company said its annual profit jumped by a third compared with 2022.
The firm, which manages and maintains 450,000 homes in the UK, said it had started new work under a Ministry of Defence contract, which was “evidence of central government increasingly looking to Mears to provide specialist housing support”.
Its share price closed 3.3% higher.
The biggest risers on the FTSE 100 were Centrica, up 4.3p to 130.3p, Smiths Group, up 43p to 1,647p, Kingfisher, up 5.9p to 248p, AstraZeneca, up 230p to 10,962p, and Rightmove, up 10p to 535.8p.
The biggest fallers on the FTSE 100 were Aviva, down 31.1p to 458.8p, Phoenix Group, down 31.5p to 511p, Tesco, down 282p to 20,905.52p, Lloyds, down 2.46p to 50.66p, and IAG Group, down 6.45p to 169.1p.