German share price index DAX graph is pictured at the stock exchange in Frankfurt, Germany, October 9, 2025. REUTERS/staff

By Medha Singh

(Reuters) -European equities edged lower on Friday as investors absorbed mixed quarterly results and a benign euro zone inflation report that reinforced the European Central Bank's view that price pressures remain contained, capping an action-packed month.

The pan-European STOXX 600 index slipped 0.5% by 1010 GMT, on track to extend declines to the fourth straight session and about 1% below its record high touched on Wednesday.

Hopes of easing interest rates and improving Sino-US trade relations have powered a series of record highs for the U.S. and European benchmark stock indexes, with the STOXX 600 looking to wrap up its fourth consecutive monthly gain.

The benchmark index, however, was on track to end the week slightly lower as traders weighed the chances of fewer interest rate cuts in the U.S. and Europe, a flurry of earnings results from U.S. tech heavyweights and a fragile Sino-U.S. trade truce.

Euro zone inflation slowed a touch in October and continued to hover near the European Central Bank's 2% target, confirming the central bank's message the previous day that the economy remains on a relatively benign path.

The ECB kept interest rates unchanged at 2% for the third meeting in a row on Thursday, fuelling expectations that the ECB would maintain current rates rather than resume cuts in this cycle.

Barclays on Friday dropped its forecast for a quarter-point rate cut in December, expecting the ECB to keep rates steady.

Martin Frandsen, portfolio manager at Principal Asset Management, said anticipation around rate cuts is especially elevated in the U.S. market, with risks "skewed to the downside if there is any disappointment over the next 12 months."

Meanwhile, Apple's strong holiday-quarter iPhone sales forecast and sharp acceleration in Amazon's cloud revenue growth reinforced Big Tech's dominance and boosted Wall Street futures.

The positive company share reaction after results was a good sign, noted Frandsen, and said, "Sometimes investors sell on good results because they start off expecting this is as good as it gets, but that does not seem to be the case."

"The growth trajectory for some of these companies is going to be really long and I don't think we've seen the best yet."

In Europe, bank stocks were in a bright spot after results. Erste Group Bank <ERST.VI> jumped 4.5% after the lender raised its annual outlook after its third-quarter results, while Danske Bank rose 2.1% after Denmark's biggest bank reported quarterly net profit slightly above expectations.

Gains in bank stocks helped the Italian bourse trade 0.4% higher and limited losses on Spain's IBEX 35 index to 0.2%.

Paris-based reinsurer Scor dropped 5.4% after reporting third-quarter results, leading losses on the STOXX 600.

(Reporting by Medha Singh in Bengaluru; Editing by Eileen Soreng and Vijay Kishore)