LONDON — European stocks were muted on Thursday as uncertainty returned following gains in the previous session.
The pan-European Stoxx 600 was up 0.1% by mid-morning. Retail stocks were the standout performers, gaining 2.2%, while telecoms fell 0.5%.
The cautious for European stocks came after gains on Wednesday on the back of strong U.S. economic data that tamed investor fears of a looming recession. The ISM non-manufacturing purchasing managers index showed a surprise rebound in July also prompting U.S. stocks to climb.
The U.K.’s FTSE pulled back ahead of the Bank of England‘s monetary policy decision later on Thursday. The central bank is broadly expected to hike interest rates by 50 basis points, its largest single increase since 1995.
Such a move would take borrowing costs to 1.75% as the central bank battles soaring inflation and would be the first half-point hike since it was made independent from the British government in 1997. The anticipated hike comes as U.K. inflation hit a new 40-year high of 9.4% in June.
Elsewhere overnight, Asia-Pacific shares traded higher on Thursday following the rally on Wall Street and as investors moved on from the tensions over U.S. House Speaker Nancy Pelosi’s controversial visit to Taiwan.
Meanwhile, U.S. stock futures were roughly flat on Thursday morning after the major averages snapped a two-day slide in the previous regular trading session.
Earnings before the bell came from Credit Agricole, Adidas, Bayer, Lufthansa, Merck, Zalando, Rolls-Royce, Next, Glencore and Adecco Group on Thursday.
At the top of the Stoxx 600, Zalando shares jumped 8.6% after the German online retailer predicted a return to profit growth in the second half of the year, despite reporting lower earnings and sales for the second quarter.
Lufthansa shares climbed 5% after the German posted a smaller-than-expected quarterly loss.
At the bottom of the European blue chip index, British pharmaceutical company Hikma dropped more than 9% after reporting a fall in first-half operating profit.
Read More: European markets muted; big Bank of England hike expected; Lufthansa up 5%