UPDATE 2-Industrials, automakers drive European shares higher at close

"Risk appetite has recovered as markets price in the prospect of lower interest rates in the U.S., potentially a Federal Reserve chair next year who has a more dovish stance," said Fiona Cincotta, senior market analyst at City Index. "There is a sense that the market is turning to a slightly more positive outlook, like the risk sentiment is improving." Technology stocks added 0.7%, with SAP rising 1.7% after J.P. Morgan backed the stock with an "overweight" rating.

European shares closed higher on Thursday, led by industrials and automakers, as global risk appetite improved on elevated U.S. rate cut expectations, while investors digested a mixed bag of corporate updates.

The pan-European STOXX 600 rose 0.45% to 578.84 points at the close, its third session of gains. Automakers led sectoral advances, climbing 2.2%, with Porsche and Mercedes-Benz adding 5.7% and 4.4% respectively.

They were boosted after U.S. President Donald Trump on Wednesday proposed slashing fuel economy standards, in a push to make it easier for automakers to sell gasoline-powered cars. Industrial stocks also rallied 1.4%. Schneider Electric and Siemens Energy gained 3.2% and 2.5%, respectively, after J.P.Morgan upgraded both companies' ratings to "overweight" from "neutral."

Those moves supported regional indexes, with those in Germany and France up about 0.9% and 0.6%, respectively. "There's finally a bit of good news for a sector that has struggled to make sustained headway in terms of real upside for quite some time... the loosening of regulation might just allow the sector a bit of breathing room," IG Chief Market Analyst Chris Beauchamp said.

INVESTORS CONFIDENT ON IMPENDING FED RATE CUT The day's moves in the STOXX 600 were also driven by investor confidence that the U.S. Federal Reserve will cut interest rates next week.

U.S. weekly jobless claims, which fell to their lowest in more than three years, did little to alter rate-cut expectations. "Risk appetite has recovered as markets price in the prospect of lower interest rates in the U.S., potentially a Federal Reserve chair next year who has a more dovish stance," said Fiona Cincotta, senior market analyst at City Index.

"There is a sense that the market is turning to a slightly more positive outlook, like the risk sentiment is improving." Technology stocks added 0.7%, with SAP rising 1.7% after J.P. Morgan backed the stock with an "overweight" rating. Capgemini, which jumped 4.2%, was reinstated at "neutral." The broker said it sees modest upside for European Software & IT Services.

European semiconductor stocks also jumped on Thursday. STMicroelectronics and Soitec advanced 3.4% and 2.7%, respectively. CHINESE CHIPMAKER'S REPORT BOOSTS SECTOR'S OUTLOOK

Traders cited reports that Chinese chipmaker Cambricon planned to triple chip output to replace Nvidia in China's AI market, which boosted the sector's outlook. Banks recovered 1.1% after the previous day's losses, while defence stocks added 0.9% as investors monitored Ukraine peace talks. Trump said on Wednesday the path ahead for Ukraine peace talks is unclear.

Meanwhile, the heavyweight healthcare sector underperformed with a 0.6% decline. Philips sank 5.6% after Citi flagged concerns about the medical technology company's 2026 growth expectations. Among other stocks, Societe Generale gained 3.2% after Goldman Sachs upgraded the stock to "buy" from "neutral."

Shares of some spirit makers fell, with Remy Cointreau and Diageo down 2.1% and 3.9% respectively, after UBS downgraded its rating on the stocks.

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)