European stocks close soft as global investors look ahead to Fed meeting

European stocks moved broadly higher on Friday but edged just above the flatline at the closing bell, with next week’s Federal Reserve policy decision in focus.

The pan-European Stoxx 600 preliminarily closed in the green, with most sectors and major regional bourses mixed.

Investors are awaiting the outcome of the Federal Reserve’s Federal Open Market Committee meeting next week. Expectations of a quarter-percentage point cut have surged in the past two weeks, with money markets now pricing in an 87.1% chance of policymakers trimming their key interest rate, according to the CME’s FedWatch tool.

Economic reports Friday brought news that core U.S. inflation for September — the most recent month for which data is available — was at 2.8%, or 0.1 percentage point below forecast, according to the Commerce Department’s personal consumption expenditures price index. PCE is the Fed’s preferred inflation forecasting metric.

At the same time, the University of Michigan’s survey of consumers showed sentiment a bit brighter than expected in December while inflation expectations hit their lowest levels since January.

The central bank is also focused on a softening labor market – but data on Thursday showed U.S. jobless claims in the week to Nov. 29 fell 27,000 from the previous week and came in below estimates.

Monetary policy focus will turn back to Europe the following week, with the Bank of England, the European Central Bank, Sweden’s Riksbank and Norway’s Norges Bank all scheduled to publish their own interest rate decisions on Dec. 18.

Investors in Europe continue to monitor developments in U.S.-led negotiations to end the war in Ukraine.

Russian President Vladimir Putin, who held talks with a U.S. delegation in Moscow earlier this week, is currently on a state visit to India. CNBC reported on Thursday that European Union officials were looking at ways to use frozen Russian assets to provide further support to Kyiv – a move that Dmitry Medvedev, deputy chairman of Russia’s Security Council, said would be tantamount to an act justifying war.

In an interview with India Today, Putin warned that Russia will seize Ukraine’s eastern Donbas region by force if Ukrainian troops do not withdraw.

In corporate news, shares of Swiss Re fell 6.5% by the end of the session, paring earlier losses that saw it occupy the bottom of the Stoxx 600 after the global reinsurer announced its 2026 financial targets. The company said it was targeting net profit of $4.5 billion, slightly higher than the minimum $4.4 billion it’s targeting in 2025. It also said its targets include annual dividend per share growth of 7% or more over the next two years.

At the other end of the index, Greggs advanced 5.2% after JPMorgan published an optimistic note on the struggling British fast food and bakery chain, per reports.

Meanwhile, U.K. online grocery firm Ocado added as much as 5% after U.S. partner Kroger reportedly agreed to pay $350 million in compensation to the company after scrapping plans for an Ocado distribution center in America. However, the stock closed just 0.3% higher.

The euro zone economy grew by 0.3% in the third quarter, data from statistics agency Eurostat showed on Friday. Flash data released in October had estimated the economy had expanded 0.2% between July and September, compared with the previous quarter.

The euro zone economy grew by just 0.1% in the second quarter, following a 0.6% expansion in the first three months of the year.

The euro was last seen down against the U.S. dollar at $1.133.

U.S. stocks also rose on Friday in anticipation of the Fed move and following the economic data releases.