European markets closed lower on Wednesday amid political uncertainty and a sharper than expected fall in euro zone inflation data.
European markets
The pan-European Stoxx 600 ended down 0.1 percent with sectors and major bourses pointing in opposite directions.
Basic resources stocks were the worst performing amid a significant decline in oil prices. Reports surfaced on Wednesday suggesting Libyan output was recovering from oilfield technical issues and subsequently fueled concerns among traders that OPEC-led production cuts would reduce a global supply overhang.
Brent crude was trading at around $49.22 a barrel as European markets closed on Wednesday, down 3.7 percent, while U.S. crude was around $47.80 a barrel, down 3.75 percent.
Elsewhere, Europe's telecoms sector was among the best performing on Wednesday on reports of mergers and acquisitions. Cellnex Telecom had hit the top of Europe's benchmark, jumping by over 4 percent following media reports that American Tower Corp was considering buying the Spanish operator. Ericsson ended 4.5 percent higher on Wednesday after Cevian Capital decided to buy more than 5 percent of the Swedish telecom gear maker.
The FTSE 100 closed slightly lower on Wednesday, as
Meanwhile, in the U.S, the Dow Jones industrial average and broader S&P 500 index both continued slightly lower on Wednesday but remained on course for monthly gains.
Banks in focus
In Italy, the banking sector continued to see pressure as reports indicated that Banca Popolare di Vicenza and Veneto Banca might be wound down. Furthermore, the uncertainty surrounding the upcoming election to choose a new government is also sending the sector into negative territory. Ubi Banca closed 3.2 percent lower and Banco Bpm dropped 2.6 percent.
Inflation drops
Flash euro zone inflation data indicated a small drop from April due to a reduction in energy prices. Inflation slipped to 1.4 percent in May, down from 1.9 percent in April and consequently boosted investor expectations that the European Central Bank (ECB) would remain fairly dovish at its meeting next week.
The euro inched up against the dollar on Wednesday and was trading at $1.1235 shortly after the European close.
Meanwhile, France and Germany want to agree on a new common corporation tax system before elections for the French National Assembly next month, the German Finance Minister Wolfgang Schaeuble said on Tuesday, according to Reuters.