European stocks closed broadly lower on Thursday as concerns about interest rates following the Federal Reserve's hawkish tone rendered the mood bearish.
News about US. and Iran signing an interim peace plan help limit markets' downside to some extent.
US President Donald Trump and his Iranian counterpart Masoud Pezeshkian electronically signed the memorandum of understanding.
The deal has already entered in force, with the US lifting the naval blockade of Iranian ports. As per the 14-point framework deal, the US, Iranian teams will begin talks to reach a final deal over the next 60 days.
Investors also digested the monetary policy moves by the Bank of England and the Swiss National Bank. Both the central banks decided to leave their key rates unchanged.
The BoE's Monetary Policy Committee governed by Andrew Bailey, voted 7-2 to hold the bank rate at 3.75%.
The current rate remains the lowest since June 2023. Previously, the central bank had reduced the rate by 25 basis points each in August and November last year.
Although inflation eased to 2.8% in May, it is expected to rise later this year as the effects of higher energy prices continue to pass through. The committee observed that the policy stance required to achieve the 2% inflation target sustainably will depend on the scale and duration of the energy shock, and how it propagates through the economy.
The Swiss National Bank left its policy rate unchanged, despite rising inflation. The central bank left its policy rate at zero percent, in line with market expectations. The SNB had lowered the key rate by 175 basis points since March 2024. The bank exited its negative rate in 2022.
The pan European Stoxx 600 drifted down 0.34%. The UK's FTSE 100 ended 1.04% down. Germany's DAX and France's CAC 40 gained 0.37% and 0.44%, respectively. Switzerland's SMI settled lower by 0.36%.
Among other markets in Austria, Belgium, Czech Republic, Denmark, Finland, Greece, Norway, Poland, Portugal and Russia ended weak.
Ireland, Sweden and Turkey closed higher, while Iceland, Netherlands and Spain ended flat.
In the UK market, LSEG shed 7% and Persimmon drifted down 6.1%, while Fresnillo and Endeavour Mining closed lower by 5.8% and 5.7%, respectively.
Relx, ICG, Land Securities, The Sage Group, Anglo American Plc, Rio Tinto, Rentokil Initial, Glencore, Airtel Africa, BP, Centrica, Entain, British Land, 3i Group, GSK, Shell, AstraZeneca, Antofagasta and National Grid lost 2%-4%.
Informa, Polar Capital Technology Trust, IAG, JD Sports Fashion, Halma, IMI, Spirax Group and Melrose Industries moved up 2%-3%.
Next, Lion Finance, Burberry Group, Intertek Group, Croda International, Standard Life, Diageo and Rolls-Royce Holdings also ended notably higher.
In the German market, Mercedez-Benz, SAP and BMW ended lower by 4%-4.6%. Volkswagen, BASF, Heidelberg Materials, Brenntag, Bayer, Scout24, Continental, Deutsche Post, Porsche Automobil Holding and Deutsche Boerse also closed weak.
Infineon climbed about 6.5%. Siemens Energy moved up 4.7%, while MTU Aero Engines, Adidas, Symrise, Beiersdorf and Siemens gained 1.3%-3.3%.
In the French market, Capgemini ended nearly 9% down. Carrefour lost 6.1% following JP Morgan placing the stock on negative catalyst watch and lower its price target. The retail firm is scheduled to announce its first-half results on July 23.
Stellantis, ArcelorMittal, Teleperformance, TotalEnergies, Publicis Groupe and Sanofi lost 2%-4%. Dassault Systemes and LVMH also closed weak.
Edenred zoomed more than 17%. Legrand climbed 5%. STMicroelectronics and Kering both gained about 4.5%. Safran, Schneider Electric, Airbus, Pernod Ricard and Hermes International moved up 2%-3%.
L'Oreal gained nearly 1.5%. The company has signed an agreement to acquire a majority stake in Innovist, a personal care company in India with brands such as Bare Anatomy and Chemist at Play.
EssilorLuxottica, Accor, Saint Gobain, Thales, Credit Agricole and Bureau Veritas also ended higher.
In economic news, the jobless rate in UK fell to 4.9% in the three months to April from 5% in the three months to March, the Office for National Statistics said. The rate was expected to remain unchanged at 5%.
Including bonuses, average earnings climbed 4.4% in the three months to April, the same rate as seen in the preceding period, and stronger than economists' forecast of 4%.
