BRUSSELS/FRANKFURT/PARIS (dpa-AFX) - The European Central Bank left its key interest rates unchanged on Thursday, but European markets ended notably lower as rising tensions in the Middle East and the resultant surge in oil prices triggered inflation concerns and potential rate hikes by some major central banks in the foreseeable future. Concerns over tech valuations amid increased spending on AI infrastructure hurt as well.
Brent crude futures shot up to $101.22 a barrel, gaining more than 7%.
The pan European Stoxx 600 dropped 1.18%. The UK's FTSE 100 ended down 0.73%, Germany's DAX tumbled 1.56% and France's CAC 40 shed 1.64%. Switzerland's SMI fell 0.71%.
Among other markets in Europe, Austria, Czech Republic, Denmark, Finland, Greece, Iceland, Ireland, Netherlands, Poland, Portugal, Spain, Sweden and Türkiye closed weak.
Belgium edged down marginally, while Norway and Russia ended higher.
The ECB, which left interest rates unchanged as expected, after raising them for the first time in nearly three years in the previous session, acknowledged that the situation remains highly uncertain as the full impact of the energy shock caused by the Middle East conflict is yet to be felt. After today's meeting, the deposit rate stands at 2.25%, the refinancing rate at 2.4% and the marginal lending rate at 2.65%.
Remarks from the ECB President Christine Lagarde heavily sided towards an interest rate hike in the upcoming session in September. However, she was confident of the longer-term outlook and pointed out that inflation expectations for the longer horizon remains well anchored.
In the UK market, Segro climbed 6.5%. 3i Group jumped 4.8%. BP, Anglo American Plc, BAE Systems, Babcock International and Shell gained 1.5%-3%.
EasyJet moved up sharply. After reporting a 70% fall in third-quarter profit, the U.K. budget carrier flagged strong summer demand.
Centrica tumbled more than 10%. The company said it would cut 1,300 jobs after half-year profit fell 18%.
Fresnillo, Endeavour Mining and Antofagasta lost 6.1%, 4.8% and 4.6%, respectively.
Marks & Spencer, Pershing Square Holdings, IAG, SSE, Rentokil Initial, Croda International, Coca-Cola HBC and Computacenter lost 3%-4.2%.
British American Tobacco, Whitbread, Investec, Experian, Scottish Mortgage, Rolls-Royce Holdings, Smiths Group and Autotrader Group also declined sharply.
In the German market, Infineon plunged more than 6%. Commerzbank shed 5.5%, while Zalando, Deutsche Telekom and Deutsche Bank lost 4%-4.1%.
SAP, Scout24, Symrise, Continental, Heidelberg Materials, Vonovia, Airbus, Fresenius, Bayer, Henkel, Siemens Healthineers, Adidas, MTU Aero Engines, Deutsche Post, BMW and Beiersdorf also ended notably lower.
Daimler Truck Holding rallied nearly 4% after raising its full-year revenue and profit outlook.
Qiagen moved up 3%. Merck, Gea Group and Brenntag also ended on a firm note.
In the French market, STMicroelectronics tanked 16%, weighed down by a sell-off in the tech space amid valuation concerns due to rising spending on AI infrastructure.
Eurofins Scientific ended lower by over 6%. BNP Paribas declined sharply despite reporting better-than-expected second-quarter profit and revenue.
Kering, LVMH, Hermes International, L'Oreal, Edenred, Societe Generale, Capgemini, Saint Gobain, Danone and Accor lost 2%-5%.
Thales surged more than 5%. Dassault Systemes gained 3.7% after delivering solid Q2 results and confirming full-year objectives.
Total Energies moved up 2.5% after delivering a robust second-quarter performance. Automotive supplier Valeo rallied more than 3% after first-half sales surpassed market expectations.
In economic news, a report from the Confederation of Business Industry, business confidence in the United Kingdom increased to 0-36 points in the third quarter of 2026 from -65 points in the second quarter.
The UK's total order book balance remained at -45 in July 2026, matching the joint-lowest level since September 2020 and falling short of market expectations of -40.
On the economic front, data from the European Automobile Manufacturers Association said Europe new car sales growth accelerated notably in June as market support measures lifted demand for electric vehicles.
Car sales in Eurozone increased 13.6% on a yearly basis after rising 3.2% in May.
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