European shares flat ahead of Fed decision; investors assess mixed corporate updates

By Purvi Agarwal and Ragini Mathur

Dec 10 (Reuters) - European shares ended flat on Wednesday, as investors adopted a cautious stance ahead of the U.S. Federal Reserve's interest rate decision, while also parsing a slate of corporate announcements.

The pan-European STOXX 600 .STOXX closed flat at 577.78, extending its pattern of trading in tight ranges during the past few sessions.

Major regional benchmarks were largely trading in the red, with ones in Germany .GDAXI and Spain .IBEX down 0.5% and 0.2% respectively.

Market attention centred on the Federal Reserve's rate decision later in the day, where the central bank is expected to trim interest rates by 25 basis points.

However, comments from Chair Jerome Powell will be scrutinised for clues on how the bank will approach monetary policy next year amid sparse economic data and the U.S. administration's push for lower rates.

"This may be another hawkish cut, but we definitely do not think the rate-cutting cycle is over," said Guy Stear, head of developed markets strategy research at Amundi.

"We expect a pause in Q1, but think the Fed will cut twice in Q2 as the effects of the U.S. budget will lead to cuts in the spending habits of the less affluent U.S. consumer."

An index of automakers .SXAP led losses, down 1.5%, dragged lower by a 4.8% drop in luxury carmaker Ferrari RACE.MI. Morgan Stanley initiated coverage with an 'equal weight' rating, while Jefferies lowered its target price on the stock.

Industrial stocks .SXNP that buoyed the market in recent sessions fell 0.35%, with defence firms weighing. The European aerospace and defence index .SXPARO lost 0.8% after gaining more than 2% in the previous two sessions.

Vinci SGEF.PA lost 3.1% after BNP Paribas downgraded the French infrastructure and concessions group to "neutral" from "outperform", with the brokerage forecasting a muted 2026 for European transport and infrastructure firms.

Construction and materials index .SXOP fell 0.8%.

Aegon AEGN.AS was the worst-performing stock for the day, losing over 10% after the insurer said it would move its legal domicile and head office to the U.S. from the Netherlands.

Bucking the trend on STOXX 600, commodity-linked stocks edged higher, with oil companies .SXEP and miners .SXPP up 0.2% and 0.75% respectively.

Banks .SX7P also supported with a 0.7% jump, with heavyweight HSBC HSBA.L gaining 3.2%. BofA Securities upgraded the lender to "buy" from "neutral", citing growth prospects in Hong Kong deposits and Asian wealth management.

Delivery Hero DHER.DE jumped 13.7% after the firm said it was reviewing capital allocation measures and evaluating strategic options, in a letter to shareholders on Tuesday.

Renewable energy firms extended Tuesday's gains with Nordex NDXG.DE up 8%, Siemens Energy ENR1n.DE gaining 4.3% and Vestas Wind Systems VWS.CO up 4.2%. U.S. peer GE Vernova GEV.N on Tuesday forecast higher 2026 revenue and boosted its share buyback plan.

French lawmakers narrowly approved the 2026 social security budget on Tuesday, handing the government a victory but at a political and financial cost.

"It does little to resolve France's underlying fiscal and political challenges... the broader state budget remains unsettled, and the narrow margin for this win highlights the government's continued vulnerability," said analysts at UBS Global Wealth Management.

France's benchmark CAC 40 .FCHI was down 0.4%.

Meanwhile, European Central Bank President Christine Lagarde suggested that the ECB may raise its growth projections next week, owing to the resilience of the eurozone economy.