The pan-European Euro Stoxx 600 ended 0.50 percent lower on Wednesday with most sectors in negative territory. The continent's major bourses were also trading lower. Healthcare stocks were among the worst performers, contracting 0.76 percent by the close. Media reports suggested that Johnson and Johnson was dropping its bid to acquire Actelion and the Swiss firm's shares ended more than 9.2 percent lower.
Utilities closed 0.7 percent down after Deutsche Bank slashed its target price for United Utilities Group. Meanwhile, stocks in the banking and financial services sectors were also down as concerns with the sustainability of Italian banks persist. Moody's updated its outlook on Italian banks from "stable" to "negative" on Tuesday on increasing capital needs and a weakening in confidence in the system.
Meanwhile in the U.S., the Dow Jones industrial average continued fractionally lower after closing more than 100 points higher and hitting a new record high in the previous session.
The focus for investors on Wednesday was the looming rate decision by the Fed. Analysts expect a rate hike of 25 points basis (bps) from the central bank with the announcement set to come after European markets close on Wednesday.
"Investors understand extraordinary monetary policy accommodation can no longer be the cure for disappointing growth and may in fact be doing more harm than good. (The Federal Reserve) increasing rates may finally signal the economy and markets are ready for a new chapter," Mark Heppenstall, chief investment officer of Penn Mutual Asset Management told CNBC by email on Wednesday.
Oil prices fell around 2 percent on Wednesday as global oversupply worries surfaced yet again after a reported rise in U.S. crude inventories. Further to this, OPEC forewarned of a growing crude surplus in 2017 should the world's top oil producing nations fail to adhere to a landmark deal to cut production.
Also on Wednesday, the Spanish company Inditex reported a net profit of 2.2 billion euros ($2.34 billion) for the nine months from February to October. Its shares closed down by more than 3 percent.
Dixons Carphone surprised on Wednesday with a 19 percent rise in its first-half profit thanks to strong sales in the U.K. Its shares were over 6.5 percent lower at the end of European trade.
On the data front, the United Kingdom reported a drop in the number of people in employment in the third quarter of 2016 - the first fall in more than a year. However, the unemployment rate remained unchanged at 4.8 percent.
The euro zone posted a contraction in industrial output in October, despite expectations of a slight rise. Data from the European statistical office showed industrial production falling by 0.1 percent in October, though the numbers were up by 0.6 percent on the year.