LONDON — European stocks moved higher on Thursday as markets reacted to the U.S. Federal Reserve's announcement that it will start to taper its bond-buying program and the Bank of England's decision to hold rates steady for now.
The pan-European Stoxx 600 added 0.4% by mid-afternoon, with oil and gas gaining 1.6% to lead gains while banks dropped 1.7% following the Bank of England's latest policy announcement.
By midday, market focus was on the Bank of England's decision to hold interest rates steady, defying some investors' expectations that it would become the first major central bank to hike rates following the pandemic.
Read more: Bank of England holds off hiking rates despite surging inflation
Markets appeared uncertain as to whether the central bank would set off on the path toward monetary policy normalization on Thursday or at its next meeting in mid-December, but analysts are broadly agreed that a hike is due before the end of the year. The U.K.'s FTSE index was trading 0.4% higher after the announcement, while the pound was down more than 1% against the dollar.
Markets began the day digesting the latest move and comments from the U.S. Federal Reserve.
The central bank said Wednesday it will begin to curb the pace of its monthly bond-buying program "later this month." The buying will slow by $15 billion per month, which means the quantitative easing should end by the middle of 2022, although the Fed reiterated flexibility, saying the amount could change if warranted.
The Federal Open Market Committee said the move came "in light of the substantial further progress the economy has made toward the Committee's goals since last December."
Read more: Fed to start tapering bond purchases later this month as it begins pulling back on pandemic aid
Shares in Asia-Pacific rose in Thursday trade following the Fed's announcement while U.S. stock index futures were steady during early morning trading on Thursday after major U.S. averages closed at records on Wednesday.
It was a busy morning for earnings in Europe on Thursday, with Credit Suisse, BMW, Commerzbank, Deutsche Post, Tate & Lyle, BT, Monte dei Paschi di Siena, Enel and SocGen among those reporting.
Credit Suisse beat analyst estimates for the third quarter, but took a hit from charges settling allegations of corruption in Mozambique and other legal issues.
The Swiss bank also revealed that it expects to report a net loss in the final quarter of 2021 and said it plans to scale back its investment banking operations. Credit Suisse shares were flat in early trade.
French bank Societe Generale posted on Thursday better-than-expected third-quarter earnings on higher revenue in its corporate and investment banking business. Shares of the bank were up 3.4% Thursday.
Alstria Office REIT was the biggest climber on the Stoxx 600, soaring more than 17% after the German real estate investment trust announced a 3.5 billion euro ($4.1 billion) takeover bid from Brookfield Asset Management.
BT shares climbed more than 8% after a strong earnings report.
At the bottom of the European blue chip index, German chemicals company Lanxess fell more than 7% after warning that increased costs would mean its 2021 core profit will come in at the lower end of its guidance range.
Virgin Money U.K. also dropped more than 7% after flagging cost pressures associated with its accelerated move into digital banking.
On the data front, euro zone business growth slumped to a six-month low in October, with supply chain bottlenecks and Covid-induced logistical problems causing input prices to spike at their quickest rate for more than two decades.
IHS Markit's Flash Composite PMI (purchasing managers' index), a key indicator of economic activity, fell to 54.2 in October from 56.2 in September.
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— CNBC's Jeff Cox and Pippa Stevens contributed to this market report.
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November 04, 2021 at 12:22PM
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European markets climb as investors digest Fed; Bank of England holds rates steady - CNBC
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