European stocks posted modest gains in volatile Thursday trading as investors awaited the European Central Bank’s interest rate verdict and key U.S. inflation data due later in the day.
The pan-European STOXX 600 index rose 0.3% to 554.08 points by 08:26 GMT. Defense stocks led sector gains with a 0.8% rise, as geopolitical tensions stayed in focus after Poland downed a suspected Russian drone earlier in the week.
The highlight of the session is the ECB’s policy decision at 12:15 GMT. While most analysts expect rates to remain unchanged, investors are closely watching President Christine Lagarde’s comments on how trade frictions and political uncertainty will shape monetary policy.
Strategists noted that the eurozone economy remains resilient despite U.S. tariffs, though activity continues to run below potential. Rate-sensitive sectors such as banks and real estate also edged slightly higher.
Concerns over rising fiscal debt across Europe have pushed long-term bond yields upward, weighing on equities. France has been particularly under scrutiny, with Citigroup cutting its equities rating to “neutral” ahead of a Fitch review. Still, the CAC 40 gained 0.7%.
Among individual movers, luxury group Kering rose 1.7% after delaying its full acquisition of Valentino until at least 2028. Covestro jumped 5.4% after reports that ADNOC is preparing measures to address an EU subsidy probe linked to its €14.7 billion bid.
Attention will later turn to U.S. consumer inflation figures, which are expected to show a modest rise in August but are unlikely to prevent the Federal Reserve from cutting rates next week.
Elsewhere, Italy’s Buzzi surged 7% after J.P. Morgan upgraded the stock to “overweight.” Technip Energies gained 4.7% after agreeing to acquire Ecovyst’s Advanced Materials & Catalysts division in a $556 million deal.
