European stocks closed lower on Wednesday, led downwards by Britain's FTSE 100, due to concerns that both the U.K. and U.S. central bank may tighten monetary policy earlier than anticipated.
The pan-European FTSEurofirst 300 index provisionally closed down 0.3 percent, with the FTSE 100 down 1.3 percent after forward guidance from Bank of England Governor Mark Carney.
Carney announced that the central bank will not raise interest rates until U.K. unemployment hits 7 percent in his first inflation report. Between March and May, it stood at 7.8 percent, according to official estimates.
Carney told reporters: "A renewed recovery is now under way in the United Kingdom and it appears to be broadening" and cautioned that the recovery is "weak" by historical standards. He added that he believes gross domestic product (GDP) in the U.K. will not hit its pre-crisis peak for another year.
(Read more: Carney unveils Fed-style forward guidance)
On Tuesday, two U.S. Federal Reserve presidents — Charles Evans and Dennis Lockhart — said the central bank would likely start reducing its stimulus program as early as September. U.S. stocks held their losses on Wednesday, with the Dow and S&P 500 on pace for their third-straight declines, amid the concerns about when the Federal will begin tapering off its asset purchases.
In Asia, Fed taper fears dominated trade. Asian stocks declined on Wednesday with Japan's Nikkei closing down 4 percent on the yen's strength. The Bank of Japan has also kicked off a two-day meeting, where it is widely expected to maintain its pledge of increasing the monetary base at an annual pace of about 60 trillion to 70 trillion yen ($600 billion-$700 billion).
In stocks news, Dutch banking and insurance group ING reported second-quarter net profit of 788 million euros ($1.05 billion), below analysts' forecasts and down 39 percent from a year ago. Analysts said that despite the headline miss, the results were still satisfactory. ING shares closed up approximately 5.13 percent in early trade.
Patrick Flynn, CFO of the group told CNBC: "What we have managed to do here is increase our margins, fees have lowered and our costs our flat. These are the drivers of this good performance."
Old Mutual weathered unpredictable economic conditions for its emerging market businesses to post 14 percent growth in first-half operating profit to £801 million ($1,227 million). The stock closed up 2.9 percent.
Randgold Resources provisionally closed down 1.4 percent after the Africa-focused miner posted a 62 percent drop in quarterly profit.
TUI Travel, the world's largest tour operator, expects to grow profits by at least 10 percent this financial year, although the company saw total bookings down 2 percent, hit by weakness in Germany and France. The stock closed down roughly 5.1 percent.
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