Europe close: Markets mixed ahead of key rate decisions
By Josh White
Date: Monday 08 Dec 2025
(Sharecast News) - European stocks closed mixed but little changed on Monday as investors looked ahead to this week's US Federal Reserve policy decision, where markets broadly expect a 25-basis point interest rate cut.
The Stoxx 600 edged down 0.07% to 578.38, as Germany's DAX added 0.11% to 24,055.69.
France's CAC 40 slipped 0.08% to 8,108.43 and London's FTSE 100 fell 0.23% to 9,645.09.
Dan Coatsworth, head of markets at AJ Bell, said Europe "got off to a quiet start, with minimal movement among the main equity indices."
Investors remained focused on central bank decisions on both sides of the Atlantic.
Patrick Munnelly, market strategy partner at TickMill, said "UK shares edged slightly lower on Monday as investors prepared for key interest rate decisions from the US Federal Reserve and the Bank of England," adding that "global attention remains fixed on Wednesday's US Federal Reserve monetary policy announcement."
Coatsworth underscored expectations around the Fed, stating: "On the economics front, the big event of the week is the US interest rate decision on Wednesday where the market is pricing in an 87% chance of a quarter percentage point cut.
"Markets may not rally if we get a 25 basis-point cut, given how investors are already expecting it to happen."
Eurozone investor sentiment improves, German industrial production strengthens
On the economic front, investor sentiment in the eurozone improved marginally, with the Sentix investor confidence index rising to -6.2 in December from -7.4 a month earlier, in line with expectations.
It remained in negative territory for the fifth consecutive month, and the current situation indicator increased to -16.5 from -17.5.
Munnelly noted that "over in the eurozone, the week is relatively quiet, with the Sentix survey on Monday being the key aggregate data release," reflecting constrained catalysts for sentiment.
Expectations edged higher to 4.8 from 3.3, marking the index's continued struggle to regain sustained momentum.
German industrial production meanwhile strengthened more than forecast in October, lifting hopes that the sector may be stabilising.
Output rose 1.8% month on month, well above the expected 0.4% increase, following a revised 1.1% rise in September.
Production was up 0.8% year on year, reversing the previous month's decline.
Growth was reported across multiple categories, including construction, machinery, electronics and optical products, although automotive output fell 1.3%.
"It's the first time since early 2024 that German industrial production increased for two consecutive months - an almost forgotten phenomenon," noted Carsten Brzeski, global head of macro at ING, adding that suggested the sector "has finally reached a period of bottoming out".
In the UK, labour market conditions remained subdued in November as firms paused hiring amid uncertainty ahead of the Budget.
The KPMG and Recruitment and Employment Confederation survey reported weaker recruitment activity, though the downturn in permanent placements was the smallest since July 2024.
Staff availability continued to improve, while wage pressures persisted.
Munnelly said the latest data "paints a mixed picture of the labour market," with new employment levels continuing to decline even as salaries rise.
He added that "pre-Budget uncertainty likely played a role, particularly in dampening hiring confidence," though pressures on pay appeared driven by "broader market dynamics."
Lisa Fernihough, head of advisory at KPMG UK, said: "A complex business environment and uncertainty around the Budget kept hiring on ice last month, as business leaders weighed potential impacts."
REC chief executive Neil Carberry added: "We can see signs of the market stabilising, including an improvement in pay rates for new jobs.
"But to really get businesses firing, they need confidence."
Defence stocks rise, Unilever down on ice cream emancipation
In equities, defence names advanced as geopolitical uncertainty lingered, with Rheinmetall rising 3.76%, Renk gaining 6.62% and Hensoldt up 2.48%.
Semiconductor-linked stocks also posted strong gains.
BE Semiconductor Industries rose 5.23%, ASM International surged 6.92% and ASML Holding climbed 2.01% as enthusiasm around artificial intelligence continued to power demand expectations.
Unilever shares slumped 6.69% as its ice cream division began trading independently.
The Magnum Ice Cream Company, which includes brands such as Magnum, Ben & Jerry's, Wall's and Cornetto, debuted in Amsterdam at €12.20, below its €12.80 reference price.
Coatsworth said "Unilever dipped to reflect the separation of its ice cream assets from the group," and added that "investors will be watching Magnum Ice Cream closely to see if its shares firm up or melt following the demerger."
He noted that "it's perfectly normal for shares in a demerged company to be volatile in the first few weeks of trading as certain investors head for the exit and others take positions."
Chief executive Peter ter Kulve said: "Now, as an independent listed company, we will be more agile, more focused, and more ambitious than ever."
Shares in the newly separate unit were up 1.33%.
Elsewhere, L'Oreal fell 1.99% after the French cosmetics group increased its stake in Swiss skincare business Galderma to 20% from 10%.
Galderma shares were ahead 1.04% in Zurich.
Reporting by Josh White for Sharecast.com.
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