European stocks flat in anticipation of central bank meetings

European stocks struggle for direction, while Sweden’s H&M surges after reporting a better-than-expected profit.

Frankfurt German stock exchange
The bull and bear, symbols for successful and bad trading, seen in Frankfurt [File: Ralph Orlowski/Reuters]

European stocks struggled for direction on Tuesday, with banking shares declining before the United States and United Kingdom central bank meetings this week, while Sweden’s H&M surged after reporting a better-than-expected profit.

Shares in the world’s second-biggest fashion retailer jumped 12.0 percent, on track for their biggest gain in almost six months, after its preliminary quarterly profit was better than expected and it signalled a better recovery from the pandemic. The broader retail index rose 1.4 percent.

Markets remained range-bound before the conclusion of the US Federal Reserve’s monetary policy meeting on Wednesday, the first since its chairman Jerome Powell unveiled a shift towards greater tolerance of inflation, effectively pledging to keep interest rates low for longer.

The Bank of England is also set to meet on Thursday, and is likely to signal that it is getting ready to pump more stimulus into the UK’s coronavirus-hit economy.


The UK’s FTSE 100 rose 0.1 percent, barely reacting to data that showed the country’s unemployment rate rose 4.1 percent in the three months to July – the first time since the coronavirus lockdown began in March – although it was in line with economists’ expectations.

The pan-European STOXX 600 was flat.

Eurozone banks slid 1.5 percent, the most among sectors.

European Central Bank board member Fabio Panetta became the latest to highlight risks from a strong currency, saying the results of its stimulus measures are “not fully satisfactory yet”.

French-German push

Meanwhile, a paper seen by Reuters news agency showed France and Germany have called on the European Union to ease bank capital and bonus rules to avoid crimping the flow of credit to an economy trying to recover from the coronavirus crisis.

Fiat Chrysler rose 5.6 percent and Peugeot-maker PSA slipped 2.1 percent after the carmakers restructured the terms of their planned merger to conserve cash.

Autoparts maker Faurecia slid 7.4 percent as PSA would postpone the planned spin-off of its 46 percent stake in the company, according to a new arrangement.

Europe’s mining sector rose 0.8 percent after data showed China’s industrial output accelerated the most in eight months in August, while retail sales grew for the first time this year, suggesting its economic recovery was gathering pace.

Source: Reuters