Europe close: Stocks end mixed, investors mulling rate outlook

European stocks traded in mixed fashion again on Tuesday as investors fretted about the timing of interest rate cuts, while French car parts supplier Forvia fell after announcing large job cuts.

The pan-European Stoxx 600 index was down 0.1% at 491.90, with the German Dax drifting lower by 0.14% alongside to 17,068.43, while Spain's Ibex 35 climbed 0.94% to 10,038.20.

Brent crude oil futures and German Bund yields both moved lower, but the euro caught a modest bid.

The European Central bank announced that negotiated pay growth slipped from 4.7% in quarterly year-on-year terms in the third quarter of 2023 to 4.5% during the final three months of the same year.

That slight dip had some economists anticipating that the ECB would wait to have the first quarter data in hand before contemplating rate cuts.

Eurostat reported that area construction fell by 0.8% month-on-month in December, while the ECB said the bloc's seasonally adjusted current account surplus hit €32bn in December (consensus: €20.3bn), versus €26.4bn in the month before.

For all of 2023 the surplus was put at 1.8% of GDP, against a deficit of 0.6% in 2022, reflecting a reversal of the terms of trade shock from rising energy prices due to the war in Ukraine, Pantheon Macroeconomics said.

Overnight, China’s central bank cut the benchmark five-year loan prime rate for the first time since June and by more than expected to 3.95%.

However, it left the one-year rate - used for most personal and corporate borrowing - unchanged.

In equity news, Forvia fell sharply as the company said it would cut around 13% of its European workforce over the next five years to compete with Asian rivals in the shift to electric cars.

UK bank Barclays was in focus after announced in first major overhaul in 10 years. Shares were up after the lender announced a major operational overhaul including massive shareholder payouts, substantial cost cuts, asset sales and a reorganisation of its business divisions as annual profits fell.

Air Liquide was up as the French industrial gases company reported better than expected full-year operating profit and saying it had already reached its margin targets planned for 2025.

Anglo American shares fell after its Amplats unit said it may have to axe more than 4,000 jobs in response to falling platinum group metals prices. The sector was also hit by poor results at Australian giant BHP which had to write off $2.5bn from its Australian nickel operations due to a collapse in the metal's price.

InterContinental Hotels was also higher after full-year results and plans to return $1bn to shareholders via a buyback and dividends.