EU shares close lower after inflation data misses

European shares closed lower on Tuesday after weak euro zone inflation data reinforced investor caution ahead of this week's European Central Bank (ECB) policy meeting.


ECB eyed

The pan-European FTSEurofirst 300 closed provisionally lower by 0.4 percent at 1,374.58 points, falling back after a modest rally on Monday. The FTSE 100 Index closed unofficially down 0.5 percent, while the French CAC 40 and the German DAX both closed down provisionally 0.3 percent.

Investors were focused on the big macroeconomic event of the week: Thursday's ECB Governing Council meeting. Many expect President Mario Draghi to announce policy measures to combat disinflation, such as interest rate cuts, cheap loans to banks or even Federal Reserve-style asset purchases.

On Tuesday, data revealed that inflation in the euro zone had declined once again, piling yet more pressure on the ECB to act and ward off deflation. Consumer prices rose by 0.5 percent year-on-year in May, according to official Eurostat statistics, marking a fall from April's 0.7 percent.

Read MoreEuro zone inflation fall ups pressure on ECB

On the jobs front, new data showed that the euro zone's unemployment rate fell to 11.7 percent in April, from 11.8 percent in March, beating market expectations.

China data

Asian stocks finished mixed on Tuesday following key Chinese economic data and monetary policy decisions in Australia and India.

In China, HSBC's final purchasing managers' index (PMI) for May came in at 49.4, down from a preliminary reading of 49.7, but higher then April's 48.1. Meanwhile, activity in the country's services sector rose to a six-month high.

Read MoreChina HSBC PMI at four-month peak in May

Wolseley shares up

U.K. homebuilder Wolseley was the only major corporate release in Europe on Tuesday, releasing flat quarterly profits. Shares closed up around 1.7 percent, boosted by forecasted revenue growth of 4 percent over the next 6 months.

In other stocks news, shares in real estate agent Foxtons closed down around 6.6 percent after Chief Executive Michael Brown stepped down after 12 years, for personal reasons. The company's current chief operation officer, Nic Budden, will succeed him on July 1.