European markets end higher as investors cheer Fed cut; SNB holds rate

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Updates after European markets close

By Purvi Agarwal, Ragini Mathur and Nikhil Sharma

Dec 11 (Reuters) - European shares closed higher on Thursday after a series of lukewarm sessions, as investors welcomed the U.S. Federal Reserve's overnight interest rate cut and assessed a policy decision from the Swiss National Bank.

The pan-European STOXX 600 .STOXX ended 0.5% higher at 581.17 points, after a muted start to the session amid renewed worries about lofty tech valuations following cloud computing giant Oracle's hefty AI spending plans.

Major regional bourses were broadly higher, with France's CAC 40 .FCHI up 0.8% and London's FTSE 100 .FTSE up 0.5%.

In the STOXX 600, at least 19 sectors were in the green, with optimism stemming from the Fed's meeting, where it cut rates by 25 basis points. However, the central bank cautioned against further reductions in the near term until there is more clarity on the labour market.

"So, in a way, the message was a bit hawkish," said Bas van Geffen, quantitative analyst at Rabobank, adding that despite the Fed's projection of one more cut in 2026, "we think the Fed will, in reality, cut more."

Investors also see a higher likelihood that White House economic adviser Kevin Hassett will become the next Fed chair, a scenario that could lead to more rate cuts next year.

Separately, the Swiss National Bank left its policy rate unchanged at 0% and said a recent agreement to reduce U.S. tariffs on Swiss goods had improved the economic outlook, even as inflation has somewhat undershot expectations.

The country's local currency franc EURCHF= strengthened 0.25% against the euro.

Meanwhile, the region-wide banking index .SX7E gained 1.7%. Exane BNP Paribas backed lenders such as Unicredit CRDI.MI and ING INGA.AS, saying they are set to generate an average Return on Tangible Equity (ROTE) of more than 16% in 2027.

Unicredit was up 2.4% and ING added 2.2%. BBVA BBVA.MC rose 2.3% after completing the buyback program.

Concerns also emerged for the sector after the European Central Bank proposed to simplify bank regulation , but failed to address easing the overall financial burdens on lenders.

Indexes focused on construction .SXOP and travel .SXTP jumped about 1.8% each. The broader luxury index .STXLUXP rose 0.6%, following three straight days of losses.

Utilities stocks .SX6P lost 0.45%, dragged by a 6.4% slide in Naturgy NTGY.MC after BlackRock sold a 7.1% stake in the Spanish gas utility for around 1.7 billion euros.

European aerospace and defence index .SXPARO lost 0.8%, staying sensitive to developments around the Russia-Ukraine conflict.

Among other movers, Delivery Hero DHER.DE fell 5.3% after Citigroup downgraded the stock to "sell" from "neutral" after a near 14% surge on Wednesday.

Schneider Electric SCHN.PA rose 2.7% after planning a share repurchase programme of up to 3.5 billion euros ($4.1 billion) through 2030, its first in nearly three years, and aims to increase its adjusted core profit margin in the same period.

RS Group RS1R.L jumped 6.6% to become the top individual gainer on the STOXX 600 after JP Morgan upgraded the industrial and electronic components provider to "overweight" from "neutral".

Fragrance maker Givaudan GIVN.S fell 7.7%, with traders citing disappointing comments on sales guidance during an analyst call ahead of next month's full-year results.

(Reporting by Purvi Agarwal and Ragini Mathur in Bengaluru; Editing by Eileen Soreng, Janane Venkatraman and David Gregorio)

((Purvi.Agarwal@thomsonreuters.com;))