Europe close: Stocks inch lower after choppy session

Thursday saw choppy trading across European stock markets with the region's main benchmark finishing lower but moving within a narrow range, as investors focused on mixed economic data from the US and developments in the Middle East.

The Stoxx 600 index closed down 0.18% (0.94 points) at 519.11, with less than four points separating the intraday high (521.08) and low (517.81).

Wall Street stocks got off to a weak start after inflation and jobless claims data blurred the outlook for the next Federal Reserve policy decision.

Following last week's bumper payroll report, markets had begun to lower their expectations for another big rate cut from the Fed. But data out on Thursday showed that jobless claims had jumped to their highest since June 2023, reviving hopes that more policy action could be on the cards to ease the strain on the economy.

Nevertheless, figures showed that the annual rate of US consumer price inflation slowed to a three-and-a-half-year low of 2.4% in September, but still came in above the 2.3% expected, raising concerns that the fight against inflation might not be over just yet.

Meanwhile, oil prices were once again on the rise as tensions in the Middle East continued to escalate. Brent was up 2.1% at $78.19 a barrel by the close in Europe, after having pulled back sharply over recent days since topping the $80 mark on Monday.

“It looks increasingly likely that Israel will go for a large-scale attack on Iran, as reports emerge of Gulf states lobbying the US to rein in its ally," said Chris Beauchamp, chief market analyst at IG. "Oil prices have surged on hints that Israel is seeking to take advantage of the Iranian attack to deliver a major strike on its opponent. The consequences of that could include a closing of the Straits of Hormuz, leading to major disruption to oil supplies.”

Back in Europe, data showed that retail sales in Germany rose over the past two months. According to delayed data from the Federal Statistical Office, sales volumes increased by 1.6% during August, following a 1.5% gain in July and a 1.1% decline in June. Destatis released figures for the past three months in one go on Thursday after suspending a number of key economic indicators in May due to a failed IT systems update at the Wiesbaden-based authority.

Market movers

GSK was among the best performers on the Stoxx 600, rising 3% after the London-listed pharma giant agreed to settle about 93% of US cases in its Zantac lawsuits for up to $2.2bn. The settlement figure was close to the "best case scenario", according to Jefferies, which said the announcement should remove a significant weight on the share price.

Deutsche Telekom rose 2% on plans to lift its dividend and buy back shares on the back of better revenue expectations in the next three years.

Leading the fallers was UK pharma firm Indivior after delivering its second profit warning this year. Shares were down 19% after Indivior said it was seeing faster initial adoption among treatment providers of a competing long-acting injectable to its Sublocade treatment, as it cut its full-year sales and earnings targets.