European stock markets flatlined on Thursday as investors took stock of Europe’s central bank cutting interest rates for the fourth time this year after reducing its growth projections.
The UK’s FTSE 100 gained 10.14 points, or 0.12%, to close at 8,311.76.
Top stock indices elsewhere in Europe were also treading water on Thursday. In Frankfurt, the Dax moved 0.05% higher, and in Paris, the Cac 40 was down 0.03%.
While there was still a chance of a larger move due to economic weakness, today’s decision by the ECB brings forward the quarter-point cut that the market was hoping for
Jochen Stanzl, analyst for CMC Markets
Markets were settled after the European Central Bank announced it was cutting interest rates by 0.25 percentage points amid signs of weakening growth and concern over the global political environment.
The central bank said efforts to return inflation to its 2% target were on track, but it expects a lower economic recovery than previous projections.
It marks the third meeting in a row that the ECB has reduced rates after picking up the pace of loosening monetary policy this year.
Meanwhile, new data from the US showed a larger-than-expected increase in producer prices last month, which tracks inflation before it reaches consumers.
It comes a day after official figures showed US inflation increased to 2.7% in November, in line with forecasts, reinforcing expectations that the Federal Reserve will cut its interest rate next week.
Trading got off to a weak start in New York, with the S&P 500 down about 0.3% , and Dow Jones down 0.2% by the time European markets closed.
Jochen Stanzl, chief market analyst for CMC Markets, said: “Unlike the Fed, which may pause after next week’s cut, the ECB is on a direct path of consecutive quarter-point cuts until the deposit rate reaches 2%.
“This market expectation is now being reinforced by even lower economic forecasts.
“While there was still a chance of a larger move due to economic weakness, today’s decision by the ECB brings forward the quarter-point cut that the market was hoping for.”
The pound weakened against the euro following the ECB’s rate cut. Sterling was down about 0.5% against the currency, at 1.209.
The pound was also down about 0.3% against the US dollar, at 1.271.
In company news, shares in recruitment specialist SThree tumbled by more than a quarter on Thursday after downgrading its profit expectations for the next financial year.
The company said employers were further delaying hiring decisions amid heightened political and economic uncertainty in recent months.
It said this was also pushing back expectations for when conditions in the jobs market will improve. Shares in SThree closed 26.6% lower.
It was a stronger day for electricals retailer Currys which was boosted after reporting stronger sales in the UK over the first half of its financial year.
It also said it reduced its pre-tax loss for the half-year to £10 million, from a £44 million pre-tax loss a year earlier. Shares in Currys surged 17.3% higher at close.
The biggest risers on the FTSE 100 were Diageo, up 69p to 2,558.5p, Severn Trent, up 46p to 2,595p, Scottish Mortgage Investment Trust, up 16.6p to 975.2p, Barclays, up 4.05p to 270.7p, and Pershing Square, up 56p to 3,892p.
The biggest fallers on the FTSE 100 were Rentokil, down 16.5p to 398.9p, Antofagasta, down 60.5p to 1,702.5p, AB Foods, down 66p to 2,126p, Fresnillo, down 19.5p to 679.5p, and Intermediate Capital, down 54p to 2,154p.