(Corrects STOXX index milestone in paragraph 2 to say it was steepest fall in two weeks, not two years)
By Avinash P, Johann M Cherian and Ragini Mathur
Feb 5 (Reuters) – European shares fell on Thursday as the European Central Bank kept interest rates unchanged but offered no clues about its next move, while investors weighed mixed earnings from a string of companies including heavyweights Shell and BNP Paribas.
The pan-European STOXX 600 edged 1% lower, its steepest fall in over two weeks, retreating from Wednesday’s record high close.
The European Central Bank held rates at 2% as expected and reinforced market bets that policy will remain steady for some time. “Inflation is in a good place,” said Christine Lagarde, president of the ECB.
However, underlying inflation in the EU has cooled faster-than-expected, exacerbated by a strengthening euro.
“The ECB downplayed concerns about the euro’s recent strength against the dollar as it is not a new development and is already incorporated into their economic projections,” said Kiran Ganesh, multi-asset strategist at UBS Global Wealth Management.
The rate-sensitive real estate and construction sectors were down 0.8% and 0.4%, respectively.
Meanwhile, Novo Nordisk plunged 7.9% after a Reuters report that Hims and Hers Health is launching copies of the Danish drugmaker’s Wegovy pill at an introductory price of $49 per month.
BANKING AND RESOURCES DRAG MARKETS LOWER
Corporate reports were dominated by banks and resources companies as investors scrutinized earnings to gauge sentiment amid geopolitical uncertainty and a clouded macroeconomic environment.
Banking stocks plunged 3.5%, weighing the most on the benchmark index.
BBVA fell 8.8% and weighed on Spain’s IBEX index as higher-than-expected costs overshadowed the bank’s higher quarterly net profit.
On the flip side, BNP Paribas rose 1.2% after the euro zone’s largest lender by assets reported better-than-expected fourth-quarter profit.
Mining stocks fell 3.4%, with Aurubis down 2.9% after Europe’s largest copper producer reported quarterly operating core profit below estimates.
Meanwhile, Glencore shares dropped 7% and Rio Tinto’s London-listed shares were down 2.6% after the latter said it was no longer in talks with Glencore about a takeover that would have created the world’s largest mining company.
British oil major Shell slipped 3.4% after missing fourth-quarter net profit expectations.
TECH REBOUNDS
Regional technology stocks rose 0.9% on the day, rebounding from Anthropic AI’s latest update which weighed on software companies, as Alphabet reported upbeat results and forecast a surge in 2026 capital spending.
“As long as CapEx keeps growing, it’s the (companies) that are getting that CapEx that are going to keep winning, and today, that’s within tech; that’s the semiconductor names,” said Craig Cameron, portfolio manager at Templeton Global Equity Group.
Defence stock Rheinmetall fell 6.5% on signs of easing geopolitical tensions between the U.S. and Iran.
(Reporting by Avinash P, Johann M Cherian and Ragini Mathur in Bengaluru; Editing by Sherry Jacob-Phillips, Tasim Zahid and Chris Reese)
