Europe markets close higher as FTSE 100 extends best run since 2019

European stock markets closed higher on Thursday, with the Stoxx 600 index provisionally climbing 0.34%.

Construction led Stoxx sector gains, up 1.9%, as industrials rose 1.3%. Telecoms posted the steepest losses, down 1.65%.

— Jenni Reid

Jari Stehn, chief European economist at Goldman Sachs, discusses his outlook for the region's economy.

After notching three days of back-to-back gains, stocks opened Friday's trading session little changed. The Dow Jones Industrial Average shed 65 points, or 0.2%. The S&P 500 and Nasdaq Composite were both trading around flat.

— Lisa Kailai Han

Russia's central bank held its key interest rate steady at 21% on Friday.

Policymakers confirmed their inflation forecast of 7% to 8% in 2025, pledging to keep monetary conditions "as tight as necessary to return inflation to the target in 2026."

The central bank noted that domestic demand in Russia continued to outpace the supply of goods and services.

— Chloe Taylor

Bank of Israel Governor Amir Yaron predicts two interest rate cuts in the next year despite inflation being at 3.3%, above the government's target.

Inflation has been higher at the end of 2024 and start of 2025 in light of higher demand and lower supply of labor, given the high proportion of working-age Israelis deployed to serve in the war in Gaza.

But "we believe that imbalance is going to come into balance in the second half of the year," Yaron told CNBC on the sidelines of the IMF Spring Meeting in Washington D.C., "as some of the fiscal consolidations are going to weigh in on demand."

The central bank chief sees inflation coming into target between 1% and 3% later this year, "as long as there is no further escalation" of the war. If that inflation rate comes down, "we'll be able to do somewhere like around two cuts within a year from now, or we price in two cuts in a year from now."

He added, however, that because of significant global and local uncertainty, the bank will have to wait and see how the data comes in. "If inflation is sticky, more sticky than we think, we'll have to be restrictive and stay restrictive for longer," he said.

— Natasha Turak

Beaten-up chip stock BE Semiconductor shot up more than 5% shortly after the open after analysts at Deutsche Bank upgraded it to "buy".

Shares of BESI have fallen by 27% so far this year. The stock pared some gains to trade around 2.7% higher by 8.45 am in London.

The Dutch multinational reported weaker-than-expected first-quarter results earlier this week, but equity analysts at Deutsche Bank suggest that it should have been "no surprise to see a miss" amid the uncertain macroeconomic backdrop.

Instead, they pointed to green shoots in the hybrid bonding order book at the company. Hybrid bonding (HB) enables semiconductor chips to be piled on top of each other, increasing their density.

The company said it had received hybrid bonding orders from two leading memory producers for HBM 4 chips that are primarily used for AI applications, as well as additional orders from a leading Asian chip maker.

Analyst Robert Sanders said: "It is time in our view to look past lingering softness in mainstream, as our industry conversations support Besi's confidence on hybrid bonding volumes in 2026/27 being a big step-up from 2025."

"Accordingly, we now think HB bookings will step up markedly in [second half of 2025] (led by TSMC, Micron and Intel), and for momentum to then push on from there," Sanders added.

— Ganesh Rao

Analysts have downgraded earnings estimates for European companies to "recessionary" levels, which could indicate a contrarian "buy" signal, according to Citi's equity strategists.

While European stocks appear to be outperforming their U.S. peers this year, Citi's European equity strategy team, led by Beata Manthey, said "[Earnings per share] downgrades have nevertheless continued to accelerate, with our proprietary Earnings Revision Index (ERI) recently hitting "recessionary" levels of around -60%."

The earnings per share estimates for the Stoxx Europe 600 index have fallen by 8.6% over the 12 months, according to FactSet data.

But the Wall Street bank's strategists also said that a severely negative reading of its proprietary measure also tends to be a contrarian signal to buy stocks. They pointed to data that showed shares were about 25% higher after 12 months, after analysts turned bearish on stocks. However, the strategists cautioned that investors could see three to six months for tepid returns.

"We therefore think it makes sense to selectively dip a toe into beaten-down Cyclicality; we Overweight Tech within the Cyclical Growth bucket, and upgrade Autos to Overweight within Cyclical Value," the Citi strategists added.

— Ganesh Rao

U.K. retail sales volumes rose for the third consecutive month in March by 0.4%, beating gloomy expectations of a 0.3% decline.

Clothing and outdoor retailers said that good weather had boosted sales, according to the Office for National Statistics, offsetting a decline in supermarket sales.

However, some economists expect the positive trend to be short-lived.

"While today's retail sales data confirmed that households spent a bit more freely than expected in Q1, that may not last," said Alex Kerr, economist at Capital Economics.

"The decline in consumer confidence to a 17-month low, in part due to the uncertainty stemming from the U.S. tariff regime and in part due to rising utility and water bills, is consistent with the annual growth rate of retail sales collapsing from 2.6% in March to around -1.0% in April."

"If the drop in confidence is sustained, consumer spending growth may be a bit softer than our forecast of 1.4% in 2025," Kerr added.

Others were cautious, but positive.

"Now the question is how much rising uncertainty will hit consumers. We think the central case is for only a modest hit and would downplay the drop in confidence this morning," said Rob Wood, chief U.K. economist at Pantheon Macroeconomics. "Uncertainty will crimp spending, but there is only so much that U.K. consumers care about U.S. tariffs on China."

— Ganesh Rao

France-based jet engine maker Safran beat investors' expectations for the first quarter and offered "strong confidence" in achieving its full-year targets amid a U.S.-led global trade war.

Safran reported 7.3 billion euros in first-quarter 2025 sales, rising by 14% on an organic basis and beating expectations of a 12.6% hike, according to FactSet's analysts' consensus data.

The stock has added 5% so far this year.

The company, known for producing propulsion systems for airplanes, helicopters, and missiles, is expected to be exposed to any change in the global tariff regime.

"While global trade discussions are fluid, Safran is actively working to mitigate the economic impact from tariffs, notablyby adapting supply flows and engaging with customers," said Olivier Andries, chief executive of Safran, in a statement. "Actual performance and robust momentum in both the civil aerospace and defense sectors reinforce our strong confidence in achieving our guidance, excluding any potential impact of tariffs, which it would be premature to quantify at this stage."

RBC analysts said they expect Safran's management to provide some guidance on "any initial estimate of the magnitude of the tariff impact."

— Ganesh Rao

China is mulling the suspension of its 125% tariff on certain U.S. goods, Bloomberg reported citing sources familiar with the matter.

The government is considering scrapping the extra duties on items including medical equipment and industrial chemicals such as ethane. Authorities are also reportedly debating scrapping the tariff on aircraft leases.

The offshore yuan strengthened slightly to 7.284 against the greenback.

—Lee Ying Shan

News flow will continue to dictate market moves at least in the short term, UBS wrote in a Thursday note.

"We expect volatility to remain elevated as negotiations continue, but recent developments suggest a less aggressive approach to resolving trade disputes," the firm said. "The market's strong rebound reflects growing confidence that the most adverse outcome can be avoided, though upcoming news flow will likely continue to drive short-term swings."

— Lisa Kailai Han

S&P 500 futures rose Thursday night following another winning session for stocks.

Futures linked to the broad market index traded 0.2% higher just after 6 p.m. ET, and Nasdaq-100 futures climbed 0.3%. Futures tied to the Dow Jones Industrial Average fell 0.1%.

— Sean Conlon