European stocks experienced a muted performance on Thursday, despite an easing global bond selloff, as investors focused on upcoming U.S. economic data for signals regarding the Federal Reserve's next policy moves. The pan-European STOXX 600 index recorded a slight gain of 0.2%, reaching 646.96, after having touched a one-month low in the previous session. Regional indexes showed mixed results, with Germany's DAX up 0.1%, Spain's index up 0.5%, and France's CAC 40 down 0.1%.
Deutsche Telekom AG shares were a highlight, gaining 1.7% following reports that activist investor Elliott Investment Management had built a significant stake in the company. Elliott is also reportedly pushing against a potential full merger between Deutsche Telekom and its American subsidiary, T-Mobile US. J.P. Morgan analyst Akhil Dattani suggested that speculation about activist involvement alone was enough to boost Deutsche Telekom's shares, noting the company's undervaluation relative to its double-digit earnings-per-share growth outlook. Elliott's involvement could pressure management to clarify the benefits of a T-Mobile transaction or abandon the idea. T-Mobile US shares also rose 2.8% to $187.30 on Wednesday.
French chip materials maker Soitec was a top performer, with its shares jumping 10% after raising its revenue growth outlook for the second quarter of 2027 to 50% year-on-year, up from a previous forecast of 30%. Belgian investment holding company Sofina gained 3.6% after reporting growth in net asset value in the first half of 2026 and disclosing that SpaceX is its largest position in its top private fund holdings. In contrast, insurer and money manager M&G fell 0.2% after releasing its first-half results.
Rising oil prices, exacerbated by the recent escalation of the Iran war, continued to fuel concerns about persistent inflation, government debt, and tighter monetary policy. Ricardo Castillo, head of investments at Mirabaud Group, noted that retail energy prices are at levels last seen in March and April, which reinforces expectations that the European Central Bank will maintain high interest rates despite modest economic growth. Traders are nearly certain the ECB will raise borrowing costs to 2.5% at its upcoming policy meeting and anticipate two additional quarter-point rate hikes by mid-2027. All eyes are now on Friday's U.S. non-farm payrolls report for further clues on the Federal Reserve's policy path, especially following hawkish comments from Chair Kevin Warsh last week.
