European Markets Waver Amid Rate Cut Expectations

European stocks fell as investors prepared for a prospective rate cut from the European Central Bank amidst a slowing euro zone economy facing political risks. While retail stocks lagged, automakers saw gains. The ECB's decision is highly anticipated, with traders largely expecting a rate reduction.

On Thursday, European stocks experienced a slight dip as investors prepared for a potential rate cut from the European Central Bank (ECB). The pan-European STOXX 600 index slipped 0.1% after an initial positive opening, with retail stocks underperforming while automakers surged ahead.

Euro zone bank shares, sensitive to interest rate changes, rose 0.4% as the ECB was expected to reduce rates—81% of traders predict a 25 basis point cut, while a minority anticipate a 50 basis point reduction. As the euro zone grapples with faltering growth and nearing inflation targets, the rate decision looms at 1315 GMT.

In contrast, Swiss stocks rallied following the Swiss National Bank's decision to slash its interest rate by 50 basis points, marking the steepest cut in nearly a decade. This move aims to anticipate global central bank actions and control the Swiss franc's appreciation.

(With inputs from agencies.)