Market Analysis

European shares declined on Thursday, dragged down by disappointing earnings from automakers, contrary to the global rally spurred by the U.S. Federal Reserve hinting at potential interest rate cuts in September.

The pan-European STOXX 600 index fell by 0.2% by 0712 GMT.

The auto sector was the hardest hit, dropping 1.4% as BMW (ETR) saw a 4% slump after reporting lower-than-expected quarterly profit margins. Volkswagen (ETR), Europe's leading automaker, declined by 1.8% following a 2.4% drop in its second-quarter operating profit. Daimler (OTC) Truck also fell 4.2% after revising its full-year revenue outlook downward.

These poor results contributed to a 0.4% decline in the German DAX.

Societe Generale (OTC) experienced a significant drop of 6.1% following its disappointing second-quarter results.

Conversely, Rolls-Royce (OTC) saw a substantial increase of 10.3% after raising its profit guidance and resuming dividend payments. Shell (LON) gained 1.5% following a second-quarter profit that exceeded expectations. Anhueser-Busch InBev rose 3.3% after reporting a core profit that surpassed forecasts for the second quarter.

While the Fed kept interest rates unchanged, it hinted at a possible rate cut in September. The Bank of England's policy decision is expected later today.

Paraphrasing text from "Reuters" all rights reserved by the original author.