Source: Sharecast
The Stoxx 600 index finished just 0.02 points higher at 549.28, with losses in Paris and Milan balanced with gains in London, Frankfurt and Madrid.
The UK and EU on Monday agreed a wide-ranging deal on trade following months of negotiations, as well as a new security and defence partnership, which the government said “paves the way” for the UK defence industry to participate in Security Action for Europe, the EU’s proposed new £150bn defence fund.
UK prime minister Kier Starmer called it a “win-win” deal, adding: “It’s time to look forward. To move on from the stale old debates and political fights to find common sense, practical solutions, which get the best for the best British people.”
"News that a fresh post-Brexit trade deal had been agreed between UK and the European Union did little to boost equities," said David Morrison, senior market analyst at Trade Nation. "The euro made gains versus sterling, suggesting that traders reckon the EU probably got the best end of negotiations."
US stock markets opened lower on the news that Moody's cut its rating on US government debt from the highest rating Aaa to Aa1 as a result of the country's eye-watering $36trn debt pile and growing interest costs. The downgrade means that none of the three major credit ratings agencies now rate US debt as the highest quality.
Also in a hit to sentiment was the European Commission which slashed its forecasts for economic growth across the eurozone over the next two years with trade tariffs expected to hit activity more than previously thought. GDP growth is forecast to hold steady at 0.9% in 2025, before rising to 1.4% in 2026, compared with previous estimates of 1.3% and 1.6%, respectively.
The Commission said it was making a "considerable downgrade" compared with its previous projections, "largely due to the impact of increased tariffs and the heightened uncertainty caused by the recent abrupt changes in US trade policy and the unpredictability of the tariffs’ final configuration".
Market movers
Shares in BNP Paribas rose after the French bank unveiled a €1.08bn share buyback plan.
Ryanair made gains after the Irish low-cost carrier reported strong demand across Europe and said it expected a recovery in fare prices. The news came alongside the airline reporting a 16% decline in full-year profits as average fares fell 7%.
Drinks giant Diageo reiterated guidance for the full year after a solid pickup in underlying growth in the third quarter, but announced that trade tariffs would hit the business by $150m.
