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Europe closes mixed after weak euro zone inflation; ECB in focus

European equities closed the session mixed Wednesday as investors digested weak inflation numbers and contemplated the possibility of further stimulus being announced by the European Central Bank (ECB) on Thursday.

Pharmas gain

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The pan-European STOXX 600 finished flat but with key sectors and bourses showing a mixed picture. Basic resources stocks were the major underperformer with price falls for gold and other commodities on Wednesday. Steel firm Arcelormittal saw shares tank as much as 10 percent before paring to close lower by 8.8 percent, after Citigroup cut its target price for the Netherlands-listed stock. Mining firms, Anglo American and Glencore also both closed lower.

However, pharmaceutical companies got a boost after Morgan Stanley raised its outlook for some of the stocks in the sector. The investment bank raised its price target for Astrazeneca, Roche, Glaxosmithkline and Novartis among others, all of which except Novartis finished higher.

Fed, ECB eyed

Investors were also eyeing fresh data from the U.S. and awaited a speech by Fed Chair Janet Yellen which could shed more light on the timing and trajectory of tightening by the U.S. central bank. November non-farm payroll numbers from the U.S. on Friday is the next major data point for markets.

Back in the euro zone, inflation grew 0.1 percent year-on-year in November, according to the European Union's official statistics office Eurostat. This is well-below the ECB's target of 2 percent and could push the case for further stimulus from the central bank. This sent the euro weaker against the dollar.

Traders are looking to the European Central Bank's (ECB) monetary policy committee meeting on Thursday. It is widely expected that the central bank will announce further stimulus at the meeting in order to boost inflation and growth – however speculation is rife over what form those might take.

Volkswagen slips after rating cut

Embattled German carmaker Volkswagen saw shares close down 2.5 percent after Standard & Poor's cut its rating to "BBB+" from "A-". The news pulled Porsche, which is owned by Volkswagen, even further, off 2.5 percent by the session close.

Volkswagen chief executive Matthias Muller was quoted by German magazine Stern as saying that compensation of customers and legal proceedings around the emissions scandal could drag on for years.

Greene King jumps

British pub group Greene King was Europe's top performer, up over 13 percent after reporting a 49.2 percent jump in first half revenue.