European shares were largely muted on Thursday as declines in heavyweight healthcare and financials limited broader gains and investors stayed cautious ahead of the European Central Bank's policy announcement and U.S. inflation data.
The pan-European STOXX 600 (.STOXX), opens new tab was up 0.2% at 580.77 as of 0932 GMT. Major regional bourses were broadly higher, with Germany's DAX (.GDAXI), opens new tab up 0.1%.
In London, the FTSE 100 (.FTSE), opens new tab gained 0.1% ahead of the Bank of England's rate decision, where markets widely expect a 25-basis-point cut. Bets were amplified after Wednesday's surprising drop in UK inflation.
Investors refrained from placing big bets ahead of the U.S. inflation report for November, which could provide clarity on the Fed's monetary policy trajectory, after employment data earlier this week failed to shift market expectations significantly.
In the market, retail stocks (.SXRP), opens new tab rose 1.2%, with budget fashion giant H&M (HMb.ST), opens new tab up 2.3%. Consumer giants such as Nestle (NESN.S), opens new tab and Unilever (ULVR.L), opens new tab also gained.
Energy (.SXEP), opens new tab shares were up 0.4%, as oil prices continued to rise. BP (BP.L), opens new tab gained marginally after it appointed Meg O'Neill, the head of Australia's Woodside Energy (WDS.AX), opens new tab, as its next CEO.
Healthcare shares (.SXDP), opens new tab slipped 0.1%, as heavyweights Novo Nordisk (NOVOb.CO), opens new tab and AstraZeneca (AZN.L), opens new tab declined about 0.5% each. Banks (.SX7P), opens new tab, among the biggest gainers this month, were down 0.2%.
The ECB's monetary policy meeting, in which it is widely expected to hold rates, is also on the radar. Investors remain keenly focused on the bank's forward guidance, particularly after board member Isabel Schnabel recently hinted at potential rate hikes.
"It's not unimaginable for the next interest rate to be up... But it's interesting to hear policymakers have that sort of level of confidence that they think that their easing process is largely done," said Iain Barnes, chief investment strategist at Netwealth.
"In the face of everything that's going on with the Fed and its incoming chair, it's just the ECB giving more clear guidance to the market."
U.S. President Donald Trump, scheduled to announce his pick for the next Fed chair soon, said on Wednesday that it would be "someone who believes in lower interest rates by a lot".
Equity indexes in Sweden (.OMXSPI), opens new tab and Norway (.OSEAX), opens new tab were flat after their central banks kept interest rates on hold. Among other movers, airport operator Aeroports de Paris (ADP.PA), opens new tab fell 8.2% to the bottom of STOXX 600 after the French transport regulator, ART, rejected its 2026 tariff proposal.
Kitchen appliances maker Rational AG (RAAG.DE), opens new tab rose 4.2%, among top gainers on STOXX 600, after UBS upgraded the stock to "buy" from "neutral".
