After falling as much as 0.9% in morning trade, the pan-European STOXX 600 index ended largely unchanged around 467.57 points. The index had shed 1.5% over the past two days on fears of a more-hawkish-than-expected ECB.
Rate-sensitive banking stocks in the bloc rose 0.2%, while real estate stocks led gains with a 1.0% rise.
The ECB, while taking a token step towards unwinding the emergency aid, gave no signal of its next policy move, including how it might dismantle the 1.85-trillion-euro Pandemic Emergency Purchase Programme (PEPP), which has kept borrowing costs low for governments and businesses.
"Today's meeting confirms our earlier expectations that PEPP will end after March. That said, the ECB clearly remains data-dependent, and has kept all options open for December," Rabobank analysts wrote in a note.
"That desire to remain flexible is also underscored by the avoidance of the word 'tapering', and the message that today did not mark a turning point for PEPP."
Analysts now expect the ECB to outline plans for major policy changes by December, and a gradual phasing out of the PEPP by March 2022.
UK's FTSE 100 led losses among regional indexes with a 1.0% drop. [.L]
British airline easyJet tumbled 10.2% and was the worst performer on the STOXX 600 after it rejected a takeover approach from Wizz Air, opting instead to raise $1.7 billion from shareholders and go it alone in an industry battling to recover from the pandemic.
Rival British Airways-owner IAG fell 1.1%, while Wizz Air dropped 1.2%, weighing on the wider travel & leisure index.
After hitting record highs in mid-August, the STOXX 600 has traded below those levels amid investor worries over the fast-spreading Delta coronavirus variant, a slowing economic recovery, and the withdrawal of stimulus by major central banks.
Graphic: APP - https://fingfx.thomsonreuters.com/gfx/mkt/akpezzleavr/APP.JPG
With Chinese gaming stocks coming under pressure from fresh regulatory scrutiny, Dutch investor Prosus, which has a stake in Chinese tech giant Tencent, fell 5.2%.
European gaming stocks including France's Ubisoft, Embracer and Rovio fell 1.6% and 3.2%, respectively.
(Reporting by Sruthi Shankar and Sagarika Jaisinghani in Bengaluru; Editing by Shounak Dasgupta, Uttaresh.V and Bernadette Baum)
By Sruthi Shankar and Ambar Warrick