European stocks mixed; central bank decisions in spotlight

Investing.com - European stocks traded in a mixed fashion on Tuesday, struggling for momentum as investors await key monetary policy decisions during the final month of the year.

The DAX index in Germany climbed 0.5% and the FTSE 100 in the U.K. was flat, while the CAC 40 in France dropped 0.3%. 

Global monetary policy in spotlight  

European equities traded lower on Monday, a gloomy start to December, but are still on track for healthy annual gains, helped by raised expectations that the U.S. Federal Reserve will cut interest rates next week.

Both the German DAX and the FTSE 100 in the U.K. are on course for 2025 winnings of over 18%, while the CAC 40 in France trails with just 10% gains as political uncertainty has weighed.

Traders are pricing in an 87.2% chance of a quarter-point Fed rate cut, according to the CME FedWatch Tool, while the Bank of England is also widely expected to cut interest rates this month given signs of cooling inflation and lackluster growth, especially after the tax rises detailed in last week’s Autumn Budget.

Remaining in Europe, flash inflation data for the eurozone, due later in the session, is expected to show annual inflation just above the European Central Bank’s medium-term target, though this is unlikely to shift the rates outlook much because markets expect the ECB to stay on hold through 2026.

European repurchases to boost momentum in 2026

Aside from help from central bank policies, analysts at Barclays also see the potential for robust momentum next year in the European corporate sector.

European companies repurchased €19.3 billion worth of shares in November 2025, near the peak level since 2017, according to Barclays in a note dated Tuesday.

Share repurchases accounted for 2.3% of European equity trading volume during the month, with energy firms and financial institutions generating more than 2.5% of volume through buybacks alone. Fourth-quarter execution has run above historical averages, the analysts noted.

The critical factor supporting continued strength is unexecuted capacity. Approximately 70% of 2026 buyback programmes remain outstanding, whilst Barclays’ probability model projects roughly €50 billion in fresh announcements during the first quarter. 

Barclays forecasts 8% earnings per share growth for European equities in 2026. Automotive manufacturers, telecommunications operators and energy companies currently offer the highest free cash flow yields amongst sectors.

Crude prices slide

Oil prices are trading lower despite retaining a positive tone earlier in the session on Tuesday, as Ukraine peace hopes remained fragile, tensions are mounting between the U.S. and Venezuela, and a group of major producers has lifted output levels.

Brent futures fell 0.7% to $62.75 a barrel, and U.S. West Texas Intermediate crude futures declined 0.7% to $58.91 a barrel.

Both benchmarks advanced more than 1% on Monday, with the WTI  contract near a two-week high.

Ukrainian President Volodymyr Zelenskiy said on Monday that Kyiv’s priorities were to maintain sovereignty and ensure strong security guarantees, adding that territorial disputes remained the most complicated sticking point.

U.S. envoy Steve Witkoff is due to brief the Russian authorities Tuesday, but an immediate end to the approaching four-year long conflict appears unlikely.

Tensions between Washington and Caracas have also become heightened after U.S. officials signalled they may tighten restrictions on Venezuela, which is seen as having the largest oil reserves in the world, including closing their airspace.

On Sunday, the Organization of Petroleum Exporting Countries and allies, known as OPEC+, reaffirmed a small oil output increase for December but also a pause in increases in the first quarter of next year due to rising fears of a supply glut.