European stocks experienced a slight downturn on Thursday, impacted by lighter trading volumes due to a market holiday in the United States. Investors adopted a cautious stance as government bond yields increased, reflecting apprehension about the potential introduction of tariffs under the Trump administration and the likelihood of fewer interest rate cuts from the Federal Reserve this year.
In terms of economic data, Germany's industrial production showed a 1.5 percent rise in November on a monthly basis, according to provisional figures from Destatis. This was a marked improvement from the revised 0.4 percent decline observed in October, and it exceeded expectations of a moderate 0.5 percent growth.
German exports increased by 2.1 percent in November, rebounding from a 2.9 percent decrease in October. On the other hand, imports saw a more pronounced decline, dropping by 3.3 percent compared to a 0.3 percent decrease in October.
Francois Villeroy, a member of the European Central Bank's Governing Council, advocated for persistent reduction of borrowing costs at each policy meeting, as long as the inflation rates align with the ECB's projections.
The pan-European STOXX 600 index saw a slight dip, reaching 513.26. Germany's DAX and France's CAC 40 indices also declined, whereas the U.K.'s FTSE 100 rose by 0.5 percent. The latter's performance was influenced by the pound reaching its lowest level in nine months amid concerns over increasing borrowing costs and the threat of stagflation.
In the U.K., retailers were under scrutiny. Tesco's shares dropped nearly 2 percent despite reporting strong holiday period results. Meanwhile, Marks & Spencer experienced a 6 percent decline following a warning about cost-related and economic challenges. B&M European Value Retail suffered a 10 percent fall after reducing its annual core profit forecast.
Conversely, BP Plc, the energy giant, saw a 1 percent increase in its share price after winning a contract to manage ONGC's Mumbai High oil and gas fields.
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