Europe close: Markets mixed, Bayer surges on Roundup reports
By Josh White
Date: Tuesday 02 Dec 2025
(Sharecast News) - European equities ended Tuesday little changed as inflation data, mixed economic indicators and a sharp rally in Bayer shares offset subdued sentiment across major benchmarks.
The Stoxx 600 inched up 0.07% to 575.65, with gains in Germany counterbalanced by losses in France and London.
Frankfurt's DAX rose 0.51% to 23,710.86, while the CAC 40 slipped 0.28% to 8,074.61 and the FTSE 100 was broadly flat, down 0.01% at 9,701.80.
As Russ Mould, investment director at AJ Bell, observed, "A robust showing from the UK banking sector following financial stress tests wasn't enough to spur the FTSE 100 into action."
Eurozone inflation edges higher in November
In economic news, data from Eurostat showed eurozone inflation edged up to 2.2% in November, slightly above both October's reading and economists' expectations.
The consumer price index was marginally above the European Central Bank's 2% target, although core inflation remained unchanged at 2.4%.
The ECB has held its key deposit rate at 2% since October, continuing a cycle of cuts from last year's record highs.
According to Patrick Munnelly, market strategy partner at TickMill, "Global markets are now focused on the Federal Reserve's upcoming interest rate decision, with expectations of a 25-basis-point rate cut.
"Similarly, the Bank of England is anticipated to announce a comparable rate adjustment later this month."
A series of UK surveys pointed to weakening domestic conditions.
Growth expectations across the private sector fell sharply, according to the Confederation of British Industry, as pre-Budget uncertainty and persistent cost pressures weighed on sentiment.
The composite activity balance dropped to -35, its lowest level since August 2020.
Retailers, meanwhile, benefitted from aggressive discounting, with shop price inflation easing to 0.6% year-on-year in November.
Food inflation decelerated but remained elevated, while non-food prices fell outright.
Munnelly noted that "Pre-budget uncertainty affected UK economic confidence in October and November, leading to slower credit growth expected to persist," adding that credit indicators remain close to 12-month averages despite weakening sentiment.
UK house prices continued to climb, rising 1.8% year-on-year, according to Nationwide, though growth slowed from October.
Nationwide chief economist Robert Gardner said the market showed resilience despite weaker confidence and higher mortgage rates, noting that future affordability would likely improve if borrowing costs fall again.
However, Munnelly cautioned that "A sharper credit slowdown post-November could signal worsening economic conditions," underscoring concerns over household leverage.
The Bank of England's Financial Policy Committee flagged mounting risks to the financial system, citing stretched equity valuations - particularly in tech stocks linked to artificial intelligence - and global economic uncertainty.
Despite the warnings, the central bank cut capital requirements for the UK's largest lenders after they passed stress tests, reducing the benchmark Tier 1 capital rule to 13%.
Russ Mould emphasised that "The UK banking sector has passed the Bank of England's stress test with flying colours," highlighting that "major UK banks would be able to cope with a severe decline in the economy and provide ongoing support to consumers and businesses."
He added that "these tests are held periodically rather than when there are alarm bells flashing," and that "the stress test results have given the Bank of England confidence to cut its estimate of how much capital banks need to hold."
Consumer confidence also softened in the UK.
A YouGov and Cebr survey reported a notable drop in job security expectations and a decline in sentiment surrounding household finances, reflecting concerns ahead of the Budget and rising unemployment.
Separately, the OECD forecast a slowdown in UK growth to 1.2% next year, warning that tax rises and global uncertainty would weigh on consumption even as inflation trends lower toward target.
Munnelly said the OECD's outlook was partly driven by "finance minister Rachel Reeves' budget, which boosted consumption and eased concerns over long-term fiscal stability," noting that the policy shift had sparked "rallies in UK stocks, bonds, and the pound."
Bayer jumps on Roundup rumours, UK banks in focus
In equity markets, Bayer was a standout performer.
The German chemicals group surged 12.08% after the Trump administration backed moves to limit lawsuits over the Roundup weedkiller, providing a degree of legal relief in its long-running battle over the product's alleged health risks.
Mould noted that "In Germany, chemicals group Bayer soared by 13% after the Trump administration appeared to back the company's efforts to limit lawsuits around accusations that its Roundup weedkiller causes cancer," stressing the litigation legacy from its 2018 acquisition of Monsanto.
Bank stocks outperformed following the BoE's capital ruling.
The FTSE 350 Banks index advanced 1.16%, with Metro Bank and Lloyds Banking Group gaining 2.61% and 2.32% respectively.
Shares in Spain's Santander meanwhile rose 1.5% after it sold part of its stake in its Polish subsidiary Santander Polska for around $473m, reducing its holding to 9.7%.
Munnelly added that "Among financial stocks, Lloyds Banking Group led the gains ... while HSBC Holdings, Barclays, and Standard Chartered climbed between 0.9% and 1.3%," reflecting momentum across the sector following the regulator's move.
Reporting by Josh White for Sharecast.com.
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