European stocks saw a subdued performance with minor gains on Wednesday, as markets braced for the impending meetings of the Federal Reserve and the Bank of England. Market speculation suggests a 25-basis point interest rate reduction by the Federal Reserve is anticipated later today.
Investors are poised to analyze the Fed's latest economic projections and accompanying dot plot, seeking clarity on the trajectory and potential scale of rate cuts anticipated through 2025.
Meanwhile, the British pound managed to remain stable despite data revealing a rise in UK inflation to its highest level in eight months. The consumer price index recorded an annual increase to 2.6% in November, up from 2.3% in October. Excluding volatile items such as energy, food, alcohol, and tobacco, core inflation climbed to 3.5% from 3.3%. This data underpins the expectation that the Bank of England will maintain its interest rates during its concluding meeting of the year on Thursday.
The pan-European STOXX 600 inched up to 514.06, recovering from a 0.4% drop on Tuesday, which was triggered by political unrest in Germany and France. Germany's DAX remained steady, France's CAC 40 saw a slight increase of 0.1%, and the UK's FTSE 100 rose by 0.4%.
Among individual stocks, ASSA ABLOY, a leader in access solutions, gained approximately 1% following its acquisition of Norshield Security Products in the United States. British home improvement chain Kingfisher also rose by 1% after divesting its Brico Depot Romania division to Altex Romania for €70 million.
Character Group, a company specializing in toys, games, and giftware, rallied with a 3% increase after posting year-end results that met expectations. Hardide, known for its tungsten carbide coatings for engineering components, surged 29% on securing a decade-long contract for coating aerospace cargo door components.
French automobile giant Renault climbed over 5% amid reports that fellow automakers Honda and Nissan have entered talks regarding a potential merger. Meanwhile, Kontron AG's shares soared 10%, with the German technology firm announcing a substantial order worth approximately 165 million euros from a European defense entity.
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