European shares move higher as ECB keeps rate steady

European shares extended gains on Thursday after the European Central Bank kept interest rates unchanged, as expected, while positive earnings updates from companies across the region boosted the benchmark index.

The continent-wide STOXX 600 rose nearly 0.6 per cent at 1254 GMT, on track to snap three consecutive sessions of losses.

The ECB held borrowing costs steady held at 3.75 per cent but gave no hints about its next move -- and neither did President Christine Lagarde -- arguing that price pressures remain high and inflation will be above its target well into next year.

"We should be happy it was, in a sense, a boring event," said Daniel Morris, chief market strategist at BNP Paribas Asset Management.

"The ECB is facing a bigger dilemma than the Fed because the inflation data was surprisingly low out of the US, whereas in the Eurozone, you've had much higher inflation data and the recovery hasn't been as strong as expected."

Bond yields across the board held steady after the decision, with money markets now pricing in a September rate cut by the ECB.

While a raft of downbeat earnings and trade concerns have weighed on the benchmark index subdued this week, rate cut expectations have gripped investors' attention.

And, on the day, so did a few upbeat quarterly reports.

Volvo Cars accelerated nearly 9 per cent, helping lift auto stocks by about 2 per cent, after the Swedish automotive producer's second-quarter adjusted EBIT beat expectations.

Publicis jumped 5.4 per cent as the French advertising group upgraded its organic growth guidance after beating expectations for the second quarter.

Essity advanced 5.7 per cent after the Swedish hygiene products maker reported second-quarter core earnings above expectations.

In non-earnings, Essilorluxottica spiked 6.1 per cent after a news report said Facebook-parent Meta is exploring a stake in the Ray-Ban maker.

On the flip side, Finnish telecom equipment maker Nokia shed 4 per cent after reporting a 32 per cent decline in quarterly profit.

Swiss stocks lost 0.3 per cent, led by a 5.4 per cent fall in ABB as the Swiss engineering group's revenue fell short of expectations.

Husqvarna slumped 11.3 per cent, the most on the STOXX 600, after the Swedish garden equipment and tools maker said quarterly sales dropped 9 per cent due to cautious consumer spending.