Johann M. Cherian and Ozan Ergenay
(Reuters) – European shares fell on Thursday as investors avoided big bets ahead of the European Central Bank’s monetary policy decision and comments from the ECB’s Christine Lagarde on the prospect of interest rate cuts.
The pan-European index was down 0.3% as of 0906 GMT. The telecoms sector led the industry decline, led by Deutsche Telekom (OTC:) shares falling 5.5% as the company traded ex-dividend.
All eyes will be on the ECB decision due at 12:15 GMT, where the central bank is likely to remain unchanged on interest rates but will focus on any hints that rate cuts could be implemented in June, given easing price pressures and economic weakness.
Interest rate-sensitive sectors such as real estate and banks fell 0.6% and 1.0%, respectively.
“The ECB has made it clear it wants to see more evidence of slowing wage growth before it is willing to cut interest rates,” said Joost van Leenders, senior investment strategist at Van Lanschot Kempen.
After a generally lackluster week, the STOXX 600 index hit a one-month low in the previous session after a hot US inflation report raised concerns about the timing of the Federal Reserve’s first interest rate cut and fueled expectations that the ECB could cut rates before analogue
Societe Generale (OTC:) shares topped the French blue-chip index and rose 2.5% after the lender said it had agreed to sell its professional equipment finance business to rival BPCE for 1.1 billion euros ($1.18 billion).
Capping declines, oil and gas shares rose 1.2%, tracking gains in oil prices.
Idorsia delayed the release of its 2023 and first-quarter results, sending shares of the Swiss biotech company down 19.2%.
AstraZeneca (NASDAQ:) shares rose 1.5% and were among the top gainers in UK markets after the drugmaker said it plans to increase its annual dividend by 7% in 2024.
Shares of Volvo (OTC:) Cars fell 3.4% after brokerage Citigroup downgraded the stock to neutral from buy.