The Spanish stock index IBEX 35 opened in negative territory, but the momentum was insufficient to overcome the psychological level of 11,400 points, in a market that takes for granted that the ECB will lower interest rates but fears that its president will be cautious about further steps.

The European Central Bank (ECB) will announce its decision at 1215 GMT, in what will be its first easing move since 2019, and from 1245 GMT its top policymaker, Christine Lagarde, will offer clues on the institution's next moves.

"(...) we believe it will be a 'hawkish' cut, with Lagarde predictably warning that it will not be the start of continued downgrades at subsequent ECB meetings, and without committing to a predefined pace of further cuts," said brokerage Renta 4.

These analysts point out that the ECB's next decisions will depend on the macroeconomic data coming in, "in a context in which the latest inflation data are struggling to continue falling towards the 2% target (...)", in a scenario of improvement of the economic cycle in which "the Fed has delayed its first rate cut to after the summer and inflationary pressures in services, wages or energy (geopolitical) are still appreciated".

In addition to its decision on rates, the body chaired by Lagarde will update its macroeconomic forecasts, with projections for GDP growth and the consumer price index.

After the ECB meeting, attention will quickly shift to the employment report to be released in the United States on Friday, which could influence the upcoming decisions of the US Federal Reserve (Fed).

In this regard, the private sector job creation figures (the ADP index), which sometimes serve as a guide to the trend of Friday's full report, showed a cooling of the labor market.

However, the ADP survey indicator has a spotty track record as a forecast of official Labor Department data. Currently the forecast in a Reuters poll points to the creation of 185,000 jobs in May.

Against this backdrop, at 07:02 GMT on Thursday, the selective Spanish stock market index IBEX 35 was up 25.20 points, or 0.22%, to 11,378.30 points, while the FTSE Eurofirst 300 index of large European stocks was up 0.53%.

In the banking sector, Santander rose 0.11%, BBVA fell 0.21%, Caixabank advanced 0.56%, Sabadell fell 0.40%, Bankinter showed minimal variations, and Unicaja Banco rose 1.17%.

Among the large non-financial stocks, Telefónica fell 0.18%, Inditex advanced 0.26%, Iberdrola dropped 0.32%, Cellnex gained 0.49%, and the oil company Repsol rose 0.41%.

(Information by Tomás Cobos; edited by Javi West Larrañaga).