European Shares Stall Ahead of Key ECB Rate Decision

European shares ended flat as technology gains were offset by losses in real estate. Investors await the ECB's rate decision. German shares excelled with Commerzbank's surge. Focus was also on U.S. consumer prices influencing the Fed's rate actions. Key corporate movements included Rentokil's slump and Inditex's rise.

European shares remained stagnant on Wednesday, with gains in technology being counterbalanced by losses in the real estate sector. Investors turned their attention to the European Central Bank's upcoming rate decision on Thursday.

The pan-European STOXX 600 index showed minimal change. German shares outshined other European markets as Commerzbank surged by 16% following Italy's UniCredit's acquisition of a 9% stake, partly purchased from the German government for 702 million euros ($775.29 million).

ASML Holding's 3.8% increase led the technology sector upwards, although the real estate sector's 0.8% decline tempered overall gains. Basic resources saw a minor boost, gaining 0.4% due to rising copper prices driven by a softer U.S. dollar.

Britain's FTSE 100 dropped slightly by 0.2%. July's GDP data indicated no change month-on-month for the UK. U.S. consumer prices edged up in August, but underlying inflation remained high, potentially discouraging the Federal Reserve from making a significant interest rate cut next week.

Money markets now forecast a mere 15% chance of a 50 basis-point cut by the U.S. central bank on September 18, down from a previous 30% chance after the inflation data. Attention now shifts to the ECB, which is expected to announce a 25 basis-point rate cut.

"Anything other than a 25 bp rate cut from the ECB tomorrow would be a huge surprise to us and the market," commented Joe McConnell, European liquidity strategies portfolio manager at J.P. Morgan Asset Management. "The real intrigue will lie in Lagarde's comments on inflation persistence and the pace of future rate cuts."

Global investor sentiment was cautious following the U.S. presidential debate between Kamala Harris and Donald Trump, which saw betting markets swing in Harris's favour. Among notable market movers, Rentokil plummeted by 20% after highlighting a North American revenue slowdown and job cuts, while Inditex climbed 4.5% with stronger sales of its autumn-winter collections, boosting the retail sector.

(With inputs from agencies.)