European stocks hold gains

European stocks held onto early gains on Thursday after the European Central Bank (ECB) decided to keep its key policy rates unchanged, following eight consecutive cuts that had brought borrowing costs to multi-year lows. Investors welcomed the pause in rate adjustments, viewing it as a sign of stability as the ECB monitors the evolving macroeconomic environment.

Meanwhile, markets also digested new developments surrounding the outlook for trade out of the European Union, which remains a key risk factor for the region’s economic prospects. Both the STOXX 50 and the broader STOXX 600 were up around 0.5% in midday trading, buoyed by optimism that any potential downturn in monetary stimulus might be offset by improving trade conditions.

The ECB emphasized that disinflation has progressed largely in line with expectations since the previous meeting in June. However, officials signaled a cautious approach going forward, suggesting that more time is needed to assess key variables—including the trajectory of inflation, a possible trade agreement with the United States, and the potential economic drag from an overly strong euro.

The central bank’s message reinforced the view that further rate cuts may not be imminent, and instead will depend on how upcoming data evolves.

Adding to the positive sentiment, media reports suggested the United States is likely to agree to lower tariffs on EU goods to 15%—the lowest rate currently imposed on non-preferential trading partners. EU diplomats reportedly made progress toward finalizing a trade deal, potentially easing long-standing tensions and boosting export prospects for European firms.

On the corporate front, BNP Paribas shares jumped 3% after the French banking giant posted stronger-than-expected results, beating forecasts on both revenue and earnings as its diversified operations helped weather recent economic headwinds. Conversely, Nestlé declined over 3% after the Swiss food giant reported a drop in first-half sales and income, citing weak demand in some key markets and higher input costs, which weighed on margins.

The diverging performances highlight the mixed nature of corporate earnings this season, even as macroeconomic clarity begins to emerge.