European Stocks Rebound Amid Interest Rate Speculations and Market Dynamics

European stocks ended higher due to expectations of Federal Reserve rate cuts following the CPI data. The STOXX 600 index rose by 0.3%. Investors await ECB policy moves, with a predicted 0.25% rate cut. Aerospace and defense sectors led gains, while retail faced declines due to corporate disappointments.

European stocks surged on Wednesday as optimistic sentiments grew around potential interest rate cuts by the Federal Reserve, supported by an in-line U.S. inflation report.

The STOXX 600 reversed earlier losses, closing 0.3% higher. U.S. Consumer Price Index results revealed a predictable rise for November, fortifying market confidence in a 25-basis-point rate cut by the Fed coming soon. Meanwhile, attention is focused on the European Central Bank's upcoming policy decision, with an 85% probability of a similar interest rate reduction.

Rate-sensitive banks and the aerospace and defense sector recorded notable gains, despite Under Armour's third-quarter sales miss. Political developments in France and significant corporate updates from European firms further influenced market outlooks.

(With inputs from agencies.)