Europe close: Stocks fall as BoE, Norges Bank hold rates
By Josh White
Date: Thursday 06 Nov 2025
(Sharecast News) - European equities fell on Thursday, as investors digested fresh economic data from the eurozone and the UK while the Bank of England and Norway's central bank held interest rates steady.
The pan-European Stoxx 600 declined 0.72% to 567.76, with Germany's DAX down 1.27% at 23,744.24, France's CAC 40 off 1.36% at 7,964.77, and London's FTSE 100 easing 0.42% to 9,735.78.
"The FTSE 100 slipped on a negative reaction to corporate updates despite gains in Asia and the US overnight," said Russ Mould, investment director at AJ Bell.
Bank of England, Norges Bank both stand pat on rates
The Bank of England voted by a narrow five-to-four margin to maintain Bank Rate at 4%, its final decision before chancellor Rachel Reeves presents her Budget on 26 November.
Four members, including Alan Taylor and Swati Dhingra, backed a 25-basis-point cut, arguing that monetary policy was "overly restrictive".
The majority, led by governor Andrew Bailey and chief economist Huw Pill, preferred to hold, citing lingering inflation at 3.8% - still almost double the BoE's 2% target.
The MPC said "underlying disinflation continues," and that if this progress persisted, rates "are likely to continue on a gradual downward path".
The Confederation of British Industry described the hold as "understandable," while Saxo Markets' Neil Wilson said the bank was "waiting for the Budget before moving," adding that the coming fiscal tightening "could get ahead of an inevitable slowdown."
Norway's Norges Bank also kept rates unchanged at 4%, noting there had been "no new information" warranting a change in outlook.
Governor Ida Wolden Bache said inflation was "not yet fully tamed" and that policymakers were "not in a hurry" to cut rates, though guidance still points to reductions next year.
Retail sales unexpectedly slip in eurozone, German industrial production rises
Economic data painted a mixed picture across Europe.
Eurozone retail sales unexpectedly slipped 0.1% in September as declines in fuel and non-food goods offset gains in Germany and Spain.
Year-on-year, sales were up 1%, easing from August's 1.6% growth.
ING's Bert Colijn said that despite rising wages and improving consumer sentiment, "the eurozone's shopping streets are yet to benefit."
Construction activity meanwhile contracted sharply, with the HCOB eurozone construction PMI falling to 44.0 in October, its weakest level in eight months.
Germany and France posted steep declines, while Italy returned to marginal growth.
Hamburg Commercial Bank's Cyrus de la Rubia said, "The construction sector won't be driving growth in the eurozone anytime soon," citing deepening weakness in Germany and mounting political fragility in France.
Germany's industrial production rose 1.3% month-on-month in September after a steep August decline, though the rebound undershot expectations.
ING analysts said the data showed "weak signs of life," warning that any improvement would be "cyclical rather than structural".
In the UK, construction output fell for the tenth consecutive month, with the S&P Global purchasing managers' index (PMI) dropping to 44.1, its lowest since 2020.
S&P's Tim Moore said the sector faced "the fastest decline in business activity for over five years," particularly in civil engineering and residential projects.
In the US, data showing 153,000 job cuts in October - the highest October figure in over two decades - reinforced concerns about corporate belt-tightening amid AI-driven restructuring.
DHL jumps on earnings beat, Diageo shares a wash after guidance cut
Corporate earnings drove some of the day's largest stock moves.
DHL jumped 8.6% after beating quarterly forecasts despite weaker US trading volumes.
Recruitment group Adecco gained 6.3% on guidance for continued momentum, while Zalando rose 6.6% after reporting higher quarterly profit.
AstraZeneca advanced 3.1% on stronger-than-expected third-quarter results and reaffirmed full-year guidance.
On the downside, Diageo slumped 6.5% after cutting its full-year guidance and warning of continued weakness in China and the US.
"Shareholders in Diageo have been left drowning their sorrows again as the drinks giant served up another disappointment in a year littered with them," said Mould.
"This latest update increases the pressure on the Diageo hierarchy to fill the leadership vacuum created by the departure of CEO Debra Crew in July and halt the sense of drift which is pervading the business."
He added that, "The fear for markets will be that Diageo's performance reflects more than just the ups and downs associated with fluctuations in the economy and instead hints at shifting drinking habits and/or the diminished appeal of Diageo's key brands."
Diagnostics maker DiaSorin tumbled 18.8% after disappointing results, while Commerzbank fell 2% after reporting a surprise 7.9% drop in third-quarter profit to €591m.
Reporting by Josh White for Sharecast.com.
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