European stocks fall after ECB holds fire; German shares rebound

By Susan Mathew and Devik Jain

(Reuters) - European stocks ended a volatile Thursday weaker, hitting session lows after the European Central Bank left its ultra-easy policy unchanged and hinted at more support in December.

The pan-European STOXX 600 index <.STOXX> closed down 0.1%, having fallen up to 1% after the ECB resisted pressure to unveil more stimulus amid a new wave of the pandemic, but provided the clearest hint yet of fresh easing at its next meeting in December.

"Despite no immediate change in policy at today's meeting, this wasn't a sign of the ECB being satisfied with the current environment," said Jai Malhi, Global Market Strategist at J.P. Morgan Asset Management.

"Equity markets have been struggling to cope with the risks posed by the renewed spike in infections...In December, pressure will be huge for the ECB to walk the walk. The major question remains - whether the tools available to the ECB will be enough to satisfy markets and support the economy through the pandemic."

Thursday's moves follow a sharp sell-off in the previous session when Germany and France imposed nationwide restrictions - nearly as severe as the ones that drove the global economy this year into its deepest recession in generations - as coronavirus cases surged.

Rebounding from five-month lows, the German DAX <.GDAXI> advanced 0.3%, supported by the communications and technology sector.

Spain's IBEX <.IBEX> underperformed, closing down 1% at a seven-month low. Bank of Spain called for a more bold response from the European Union to help firms and households weather any deterioration in the COVID-19 crisis, warning of risks to the stability of the banking sector.

Europe's tech sector <.SX8P> rose 1.1% lifted by Dutch chip equipment supplier ASM International's (NASDAQ: ASMI) 6.5% gain as it raised its fourth-quarter guidance.

Oil major Royal Dutch Shell rose 3.6% on raising dividend after handily beating third-quarter profit forecasts. This saw the energy sector <.SXEP> rise more than 1% despite sliding oil prices. [O/R]

Leading gains was the travel sector <.SXTP>, posting its biggest intraday gain in over three weeks, as Flutter Entertainment jumped 8.3% on the possibility of entering the elite Euro STOXX 50 blue-chip index <.STOXX50E>.]

The jump helped Ireland's ISEQ <.ISEQ> log its best day since May.

In the busiest day for European reporting season, telecom stocks <.SXKP> took a beating as Finnish telecom network equipment maker Nokia slumped 18.5% after it cut its full-year profit forecast.

(Reporting by Sruthi Shankar in Bengaluru; Editing by Sriraj Kalluvila and Mark Heinrich)

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