On Thursday, European equities experienced a downturn following the anticipated rate cut by the U.S. Federal Reserve, which outlined plans for two additional cuts in 2025, falling short of the four previously projected in September.
Investors were also on edge ahead of the Bank of England's final meeting of the year, scheduled for later that day. The central bank is largely expected to maintain rates at 4.75 percent, given recent data indicating robust wage growth and inflation surpassing its 2 percent target.
In terms of economic data, Germany's forward-looking consumer sentiment index improved to -21.3 for January from -23.1 in December, surpassing expectations of a rise to -22.6. Meanwhile, France's manufacturing sentiment index remained steady at 97 for December, consistent with November's figure.
The pan-European STOXX 600 index dropped 1.1 percent to 508.81, following a modest gain of 0.2 percent in the previous trading session. Similarly, Germany's DAX fell by 0.9 percent, France's CAC 40 decreased by 1.1 percent, and the UK's FTSE 100 saw a decline of 1 percent.
In corporate news, Swedish construction company Skanska AB saw its shares drop 1.2 percent after it sold the multi-family rental property C.F. Møllers Have in Copenhagen, Denmark. Conversely, Swiss tech firm SoftwareOne Holding's shares surged 7 percent upon announcing an acquisition deal with Crayon Group Holding.
Automaker Stellantis NV experienced a 1.6 percent decline in stock value after reporting a sales decrease for November. On the other hand, Renault's shares climbed 1.2 percent in Paris following reports that Foxconn is in discussions with Renault, Nissan Motor Co.'s largest shareholder, regarding the potential sale of its shares in the Japanese automotive company.
Serco Group shares rose nearly 7 percent in London after the outsourcing juggernaut projected full-year revenues of £4.8 billion, aligning with its previous forecasts. Additionally, German fragrance and cosmetics company Douglas Holding AG's shares dropped almost 5 percent, even though it reported a swing back to profitability in the fourth quarter.
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