LONDON — European stocks edged lower on Monday as global investors focus on the U.S. Federal Reserve’s monetary policy decision this week.
The pan-European Stoxx 600 was last seen below the flatline, with major reginal bourses and sectors mixed at 8:30 a.m. in London (3:30 a.m. ET).
The Fed is widely expected to cut its key interest rate at its final meeting of the year, with traders pricing in around an 87% chance of a 25-basis-point cut this Wednesday when the central bank concludes its two-day meeting, according to the CME FedWatch tool.
The Fed’s decision will set the scene for other central banks who will hold their final policy meetings of the year this week and next. The Swiss National Bank will deliver its latest policy update on Thursday and next week we’ll get rate decisions from the Bank of England and European Central Bank on Dec. 18.
The jury is still out as to whether the BOE will cut its base rate when it meets, but the ECB is widely expected to hold rates steady. The Bank of Japan is also set to hold its last policy meeting of 2025 on Dec. 19.
Defense stocks led the European benchmark, with Renk, Rheinmetall and Hensoldt occupying the top of the index. The names moved 5%, 2.4% and 2.3%, respectively.
Over the weekend, U.S. President Donald Trump’s outgoing Ukraine envoy Keith Kellogg said a deal to end the Ukraine war was “really close.” The two main sticking points are the future of Ukraine’s Donbas region and the Zaporizhzhia nuclear power plant.
“If we get those two issues settled, I think the rest of the things will work out fairly well,” Kellogg said on Saturday. “We’re almost there.”
In corporate news, Unilever’s spinoff ice cream business will begin trading on Monday. The Magnum Ice Cream Company, which includes Magnum, Ben & Jerry’s, Wall’s and Cornetto, has a reference price of 12.80 euros ($14.93) in the company’s primary Amsterdam listing. Secondary listings are also set to begin trading in London and New York.
Unilever traded 4% lower in early dealmaking.
There are no major earnings in Europe on Monday. On the data front, German industrial production figures will be published.
Overnight, Asia-Pacific markets traded mixed as investors assessed data that showed China’s exports jumped more than expected in November. U.S. stock futures were near flat on Sunday night. U.S. markets received a boost on Friday after the delayed release of September’s core personal consumption expenditures price index came in softer than economists anticipated.
That was one of the last major economic releases ahead of the Fed’s policy gathering taking place this week.
— CNBC’s Alex Harring contributed to this market report.