European stocks rally after the ECB holds interest rates but warns rising energy prices could push inflation higher

The ECB held its deposit facility rate at 2.50% on Thursday, marking its first pause in six months, while warning that rising energy prices pose "upside risks to the inflation outlook." JPMorgan analyst Greg Fuzesi said a rate hike in December "remains very likely," with at least one further increase expected in March. The decision followed ECB president Christine Lagarde's announcement that she would step down on February 7 2027, nearly eight months short of the end of her term.

Lagarde, who has led the ECB since November 2019, told the Governing Council she intends to resign, triggering a succession race at a critical moment.

Google parent Alphabet's shares plunged 13%, fanning AI jitters that rattled tech investors across the Atlantic.