European Stocks Wobble Amid Central Bank Rate Decisions and Market Fatigue

European shares faced a downturn as interest rate decisions from major central banks impacted investor sentiment. The STOXX 600 fell by 0.5%, with notable losses in the banking sector. Central bank actions and economic uncertainties, including U.S. tariffs, contributed to market volatility, impacting sectors like luxury goods and real estate.

In a volatile market session, European shares ceded early gains on Thursday, under pressure from banking sector losses while investors braced for crucial interest rate decisions by major central banks across the continent. The pan-European STOXX 600 index saw a 0.5% decline by 0941 GMT, disrupting a four-day winning streak.

The Bank of England is anticipated to maintain interest rates, awaiting the effects of U.S. President Trump's trade tariffs and the UK's forthcoming employer tax hike. Meanwhile, Sweden's and Switzerland's central banks kept and cut rates respectively, reflecting the varied fiscal approaches across Europe.

Investor sentiment was further dampened as the European banks index fell approximately 2%. Commerzbank notably dropped 6.2%, marking its steepest daily drop since last month, amid unchanged merger talks with UniCredit. Meanwhile, the luxury goods sector and real estate sub-index experienced mixed performances amidst economic uncertainty.

(With inputs from agencies.)