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Oct 10 Reuters European shares closed lower on Thursday, with defence and industrial stocks leading losses, after data showed U.S. inflation ticked higher, while investors waited for France to unveil its 2025 budget.

The panEuropean STOXX 600 index fell 0.2, with defence, industrials and technology each losing over 1.

Yields on the German 10year bond , which tend to react to U.S. data, pared declines but remained at a onemonth high, also pressuring equities.

U.S. consumer prices rose slightly more than expected in September, but the annual inflation increase was the smallest in more than 312 years.

The report, however, did little to thwart expectations that the Federal Reserve will cut interest rates by 25 basis points at its November meeting, the CME Group39;s FedWatch Tool showed.

It is still above target but lower than the Fed funds rate. So that means that the Fed still has room to manoeuvre, said Yvan Mamalet, senior market strategist at SG Kleinwort Hambros.

Closer to home, markets expect the European Central Bank to trim interest rates by nearly 50 basis points by yearend, LSEG data showed.

Minutes from the ECB39;s September meeting showed policymakers appeared content with the drop in inflation but argued for a gradual policy easing given stubborn price pressures.

The STOXX 600 has been choppy this week as uncertainty…