European stocks closed lower on Wednesday as traders paused for breath after a strong "risk-on" rally since Donald Trump's election win and oil prices rebounded after comments from Russia's energy minister.
The pan-European STOXX 600 closed 0.2 percent lower after fluctuating for much of the morning session. Chemical stocks and banks were leading the falls, dropping more than 1 percent, after seeing heaving buying for the last few seasons.
Traders continue to watch Trump's economic policies closely for clues on the outlook for interest rates. The Republican has said that he planned to spend on infrastructure and cut taxes to stimulate the economy. Increased fiscal stimulus could have an impact on the Federal Reserve's interest rate hiking path.
Meanwhile, in the U.S., the Dow Jones industrial average continued lower as investor hopes faded of Wall Street extending its winning streak to an eighth consecutive day. The U.S dollar had earlier hit a 14-year high against a basket of six currencies.
Oil prices whipsawed in afternoon trade after comments from Alexander Novak, Russia's energy minister, offset bearish U.S. crude stockpile reports.
Novak said that Russia was ready to support OPEC's decision on an oil output freeze and saw a big chance that terms could be agreed in time for the oil producers' group meeting at the end of the month, according to Reuters.
U.S crude jumped more than 1 percent after the energy minister's statement, though retreated by 11.30am ET to around $46.76 a barrel. Meanwhile, WTI was trading around $45.73 a barrel.
In business news, Volkswagen has reached an agreement with U.S. regulators to fix and buyback around 80,000 polluting Audi, Porsche and VW cars, Reuters reported, citing sources. Shares were slightly lower at the close.
Meanwhile, investors in Banca Monte dei Paschi di Siena have given the green light to a debt to equity conversion scheme that is forming part of the troubled lender's rescue plan. But shares were down 2.3 percent.
On the earnings front, France's Bouygues reported a rise in third-quarter operating profits and strength in its key telecoms business, sending shares sharply higher. Meanwhile, rival Iliad also posted strong earnings with third-quarter revenues up 6.5 percent year-on-year. Shares of Iliad however ended in negative territory.
Aggreko shares reversed earlier gains to and closed over 4 percent down despite reporting that 2016 results will be broadly in line with expectations. The turn in trade came after analyst firm Peel Hunt cut its price target for the stock.
Elsewhere, Anglo-American shares got a boost after Goldman Sachs and Deutsche Bank raised their price targets for the London-listed miner. Shares closed slightly lower.
Bayer shares, however, fell 4.19 percent after the German chemicals company announced plans to sell 4 billion euros ($4.3 billion) of convertible notes to raise money for its proposed acquisition of Monsanto.
On the data front, the U.K. unemployment rate fell to 4.8 percent in the third quarter of the year, versus 4.9 percent in the previous three months, to hit its lowest level in over a decade.