Europe stocks close higher; Direct Line soars 41% after rejecting Aviva bid

European markets closed higher Thursday, recovering from a downbeat previous session.

The pan-European Stoxx 600 index provisionally ended up 0.45%, with most sectors in the green. Banking stocks led the pack, up 0.98%, while household goods were a rare outlier, down 0.67%.

The FTSE 100 ended the day up 0.04% at 8,278 points, the CAC added 0.54% to 7,181 and the DAX rose 0.84% to 19,423. Italy’s FTSE MIB also added 0.51% to 33,262.

— Karen Gilchrist

Shares of Grifols were down 10.7% in afternoon deals, a day after Canadian fund Brookfield said it would walk away from its planned acquisition of the Spanish pharmaceuticals firm.

Meanwhile, shares of Airbus climbed 4% amid reports that it would receive some jet engines from aircraft engine manufacturer CFM to help it hit its year-end targets, according to Reuters.

— Karen Gilchrist

Donald Trump’s re-election as U.S. president is “already moving the macro-financial needle and raising downside risks for the global economy,” Paul Gruenwald, global chief economist at S&P Global Ratings, said in an outlook for the first quarter of 2025.

“Our preliminary policy read on the new U.S. administration is that positive growth effects will be minimal, inflation pressures will rise, and the Fed is likely to stop cutting rates earlier. This will lead to tighter financial conditions, a stronger dollar, and a more complicated macroeconomic picture elsewhere,” Gruenwald said.

S&P Global Ratings forecast that economic growth in the euro zone will rise from 0.8% in 2024 to 1.2% in 2025, with Germany rebounding from a 0.1% contraction to 0.9% growth.

U.S. growth is forecast to slow from 2.7% in 2024 to 2% next year.

The report also notes that new leaders in the U.S., EU, and Germany may take decisions early next year which could reshape the economic outlook.

— Jenni Reid

German inflation stayed unchanged at 2.4% on an annual basis in November, preliminary data from the country’s statistics office Destatis showed Thursday. The reading is harmonized for comparability across the euro area.

Analysts polled by Reuters had been expecting harmonized inflation to rise to 2.6% in November. This would have been the second consecutive increase, with inflation having jumped back above the European Central Bank’s 2% target in October.

Core inflation, which excludes food and energy prices, came in at 3% in November, just above the previous month’s 2.9% reading, while services inflation held steady at 4%.

Consumer price data for the broader euro zone is due out on Friday.

— Sophie Kiderlin

British grocery chains Tesco and Sainsburys were respectively 1.4% and 2.4% higher in early afternoon deals, after analysts at JP Morgan upgraded both stocks to “overweight” from “underweight.”

European waste management business Renewi jumped more than 43% to an all-time high after announcing it has reached a preliminary agreement to be acquired by Australia’s Macquarie Asset Management for 870 pence per Renewi share in cash.

— Jenni Reid

Economic sentiment in both the European Union and euro area crept slightly higher in November, according to a survey published by the European Commission, although employment expectations weakened.

Increased confidence in industry and the retail trade was largely offset by lower confidence in services and among consumers, the EC said. Among the larger economies, France, Spain and the Netherlands recorded the strongest improvements in sentiment, while Germany showed a marked decline.

Carsten Brzeski, global head of macro at ING, said a mix of economic data Thursday was “comforting the hawks” at the European Central Bank, referring to policymakers who favor a cautious approach to interest rate cuts.

“There isn’t any strong growth momentum, stemming from monetary developments, but a continued increase in housing loans and longer-dated corporate loans should at least gradually support the economy,” Brzeski said, noting that ECB board members such as Isabel Schnabel were concerned that U.S. President-elect Donald Trump’s policies could fuel euro zone inflation.

“Today’s [Economic Sentiment Indicator] should be taken with a pinch of salt as it wouldn’t be the first time that sentiment indicators react with a delay to political events, like the U.S. elections. At face value, however, it will comfort the ECB hawks to oppose a 50 [basis point] rate cut at the December meeting,” Brzeski said.

— Jenni Reid

The euro and British pound were both around 0.2% lower against the U.S. dollar in mid-morning trade, coming off solid gains against the greenback in the previous session.

Investors are continuing to assess the impact of U.S. President-elect Donald Trump’s upcoming increase in trade tariffs, French political volatility and shaky U.K. business and consumer sentiment, along with the interest rate trajectories of the Federal Reserve, European Central Bank and Bank of England.

“In recent sessions, the [euro] has taken back some ground vs the [U.S. dollar]. Over-extended positions, month-end and speculation that the market may have priced in too much U.S. inflation risk from Trump’s policies has pared the [dollar]’s advance,” Rabobank analysts said in a Thursday morning note.

Spain’s inflation rate hit 2.4% in November, in line with expectations of economists polled by Reuters and up from 1.8% the previous month.

It comes after annual inflation in the country hit a three-year low of 1.5% in September.

German inflation data is due later Thursday ahead of the euro-zone-wide print on Friday. Economists expect price rises in the 20-nation bloc to have increased from 2% to 2.3% in November.

Markets have fully priced a 25-basis-point interest rate cut from the European Central Bank at its Dec. 12 meeting — its fourth reduction of the year. Expectations for a larger 50-basis-point cut have faded despite ongoing concerns about weak euro area growth.

— Jenni Reid

Shares of British insurance firm Direct Line jumped 39% in early deals, hitting their highest level since March, after it said a takeover offer from rival Aviva “substantially undervalued” the company.

Aviva announced Wednesday it had made a full acquisition bid for the company on Nov. 19, offering Direct Line shareholders 112.5 pence per Direct Line share in cash — a 59.7% premium on their closing price on Nov. 18 — and 0.282 new Aviva shares per Direct Line share.

Direct Line confirmed the unsolicited offer, and said its board had concluded it was “highly opportunistic and substantially undervalued the company.”

“The Board has considerable conviction in the capabilities of our newly established leadership team and stands firmly behind their delivery of our strategy. Under this strategy, the Company continues to make early progress towards our financial targets, and expects to deliver attractive growth in profitability, capital generation and shareholder returns,” it said.

It added that there was no guarantee a firm offer would be made or on what terms. Aviva must confirm whether it intends to made a firm offer or not by 5 p.m. on Dec. 25.

Aviva shares were down 3.39% at 8:47 a.m. London time.

— Jenni Reid

European stocks rebounded at Thursday’s open, with the Stoxx 600 index up 0.49% at 8:23 a.m. London time. Technology stocks led gains, up 1.57%.

Germany’s DAX and France’s CAC 40 were both higher by around 0.5%, while the U.K.’s FTSE 100 nudged up 0.2%.

— Jenni Reid

U.K. consumer confidence remains weak in the aftermath of the Labour government’s landmark first budget in October, according to a November survey by the British Retail Consortium.

A BRC-Opinium poll found opinions on the state of the economy worsened slightly, while people’s assessment of their own finances improved slightly. Personal spending held steady on October.

“There was little shift in consumer confidence since the Chancellor’s Budget, with many worried about the economy in the lead up to Christmas,” BRC Chief Executive Helen Dickinson said.

“The last month clearly did little to shift the dial for households either positively or negatively, however, the same cannot be said for the retail industry. With over £7 billion in additional costs in 2025 resulting from the Budget, retailers will have little choice but to raise prices or reduce investment in jobs and shops.”

Sweeping reforms announced by Labour have sparked a largely negative reaction from the U.K. business community, who argue that higher taxes and upcoming changes to employment rights have put a strain on employers.

— Jenni Reid

French spirits group Remy Cointreau reported a 12.9% fall in first-half operating profit to 147.3 million euros ($155.3 million), a smaller decline than forecast in a company-compiled analyst poll.

Analysts had expected a decline of 20.6% in operating profit.

CEO Éric Vallat said the company held margins steady in the first half through “rigorous cost management,” as it implements a 50 million euro full-year savings strategy. The drinks maker is grappling with weak demand in the U.S. and Asia-Pacific, and along with other brandy producers, higher duties on Chinese exports amid an EU-China trade spat.

Consolidated sales were 15.9% lower on an organic basis through the period.

The firm forecasts no return to growth in the Americas before the fourth quarter at the earliest, and a sales deterioration in Asia-Pacific, “in light of a persistent lack of visibility on the timing of recovery in the United States, and worsening market conditions in China.”

It forecast an overall organic sales decline of between 15% and 18% for the full year, updating a forecast for a “double digit decline” issued in October.

European markets are expected to open higher Thursday.

The U.K.’s FTSE 100 index is expected to open 16 points higher at 8,291, Germany’s DAX up 72 points at 19,334, France’s CAC up 30 points at 7,173 and Italy’s FTSE MIB up 98 points at 33,310, according to data from IG.

There are no major earnings Thursday, but data releases include Spanish and German inflation and European economic sentiment figures. Italian and Spanish business confidence data is also due.

— Holly Ellyatt

Bitcoin on Wednesday climbed back above $96,000, recovering slightly from a pullback this week that knocked it from record levels.

The price of the flagship cryptocurrency was last higher by nearly 6% at $96,676.70, according to Coin Metrics, while ether jumped more than 9% to $3,636.46. The broader crypto market, as measured by the CoinDesk 20 index, gained 7%.

Although bitcoin is widely viewed as a store of value and a digital alternative to gold, the cryptocurrency often trades in tandem with the stock market. On Wednesday, however, it decoupled with the tech-heavy Nasdaq Composite, which was lower by 0.6%. The Dow Jones Industrial Average and S&P 500 dropped as well.

Coinbase was up more than 6% as bitcoin lifted it along with other crypto stocks.

— Tanaya Macheel

President-elect Donald Trump’s proposed steep tariffs on imports could create winners in the stock market — particularly among companies that help businesses manage their supply chains, according to Redburn Atlantic.

These tech stocks have outperformed during “periods of supply chain uncertainty,” the Redburn analyst said citing 2018-2019 trade tensions between the U.S. and China.

CNBC Pro subscribers can read more here.

— Ganesh Rao

The percentage of all stocks in the S&P 500 above their 200-day moving averages is currently 77%, and has remained above at least 60% for the past year. This proves that the underpinnings of the market are “still solid,” according to Chris Verrone, head of the technical and macro research at Strategas.

The strong moving averages, which smooth out short-term fluctuations to show the underlying trend in a stock price, “speaks to the persistence of decent internals,” Verrone wrote to clients on Wednesday.

“It’s not historically uncommon for the early part of December to be a shoulder period for stocks, but the market is still smack in the middle of its best 3-month run of the calendar,” he said, referring to the period from Oct. 31 until Jan. 31.

— Scott Schnipper

Attractive returns and a breadth of opportunities are among the reasons the U.S. market historically reigned supreme among investors.

However, one market watcher considers U.S. stocks expensive and is now seeking opportunities in other markets that are cheaper.

“We believe markets outside the U.S. are more attractive than the U.S. largely from a valuation perspective,” Kunal Kapoor, chief executive officer at Morningstar said, revealing markets with “attractive pockets” of opportunity.

CNBC Pro subscribers can read more here.

— Amala Balakrishner