European stocks closed in negative territory on Wednesdayas the sharp rise in oil prices failed to win over investors, with news surrounding the U.S. Federal Reserve and European Central Bank continuing to dwell.
The pan-European STOXX 600 finished 0.55 percent down provisionally, despite a positive trading session on Wall Street. Most sectors ended in the red, however banks and insurance outperformed.
The U.K.'s FTSE 100 closed 0.58 percent down, while France's CAC 40 and Germany's DAX also ended lower, down 0.29 and 0.32 percent respectively. Italy's FTSE MIB outperformed other bourses, ending 1.03 percent higher as the country's banks posted solid gains.
Hawkish central banks?
European markets
Recent remarks from Fed officials indicating a forthcoming hike in interest rates kept investors on edge during Wednesday's session.
On Tuesday, Richmond Fed President Jeffrey Lacker said there was a strong case for raising interest rates, while Chicago Fed President Charles Evans said on Wednesday in New Zealand that he would be "fine" with hiking rates by year-end if the data remained supportive, Reuters reported.
Meanwhile in Europe, a Bloomberg report on Tuesday said the European Central Bank might taper bond purchases before the expected March end of its quantitative easing program. The ECB later denied it had discussed the subject.
Meanwhile, oil extended gains on Wednesday afternoon with prices rising after the EIA revealed that U.S. crude inventories had declined by 3.0 million barrels in the previous week. Brent stood at $51.89 at Europe's close, while U.S. crude rose more than 2 percent to $49.80.
Elsewhere, concerns over Brexit continue to weigh on sterling, with the currency hitting a 31-year low against the dollar on Tuesday. On Wednesday, sterling remained under pressure, trading slightly up against the dollar at Europe's close, at $1.2754.
In commodity markets, gold prices eked out some gains during most of Wednesday's trade, after falling 3.3 percent in the prior session to their lowest in more than three months, as the dollar eased back and equities fell, Reuters reported. However spot silver and other metal prices posted solid declines on Wednesday, adding pressure to basic resources, with precious metals miners Fresnillo and Randgold Resources closing sharply lower.
Tesco shares rally
On the earnings front, British supermarket chain Tesco reported a 60.2 percent year-on-year rise in first-half operating profit before exceptional items, sending shares up as much as 13.5 percent during trade. The stock closed 9.75 percent up. This helped lift other stocks in the sector including WM Morrison, Marks and Spencer and France's Casino, which got a price target upgrade from HSBC.
Deutsche Bank shares finished up 2.77 percent after German market newsletter Der Platow Brief reported that the lender is looking at a settlement of around $4-5 billion by the end of October with the U.S. Department of Justice, much lower than the $14 billion the authorities were seeking.
France's market watchdog blocked a proposed takeover of SFR by Altice. Shares of SFR sank some 4.4 percent while Altice closed up 0.9 percent.