- The first reading of June's activity in the services and manufacturing sectors in the euro zone showed business growth accelerating at its quickest rate in 15 years.
- Bitcoin was also in focus for investors given its volatile session on Tuesday, with the cryptocurrency at one point dipping below $30,000 and erasing its gains for 2021.
LONDON — European stocks dropped on Wednesday despite Purchasing Managers' Indexes showing booming business growth in the euro zone.
The pan-European Stoxx 600 provisionally ended the session down about 0.6%, with utilities stocks falling 1.4% to lead losses as most sectors and major bourses slipped into negative territory.
The first reading of June's activity in the services and manufacturing sectors in the euro zone showed business growth accelerating at its quickest rate in 15 years, as pent-up demand is unleashed by the easing of lockdown measures across the single currency bloc.
IHS Markit's "flash" or preliminary composite reading, which encompasses both services and manufacturing, came in at 59.2, its highest reading since 2006 and up from 57.1 in May. Anything above 50 represents expansion.
"For investors, the European PMI numbers are good news as it shows that the recovery is back on track after the negative GDP growth in Q1, which was due to the lockdowns at that time," said Willem Sels, chief investment officer for private banking and wealth management at HSBC.
"In European stock markets, we particularly like European exporters of consumer goods and services, to tap into the global recovery in consumption."
In the U.K., the composite reading came in at 61.7, down from May's unprecedented 62.9, with IHS Markit noting that businesses are reporting an ongoing surge in demand.
"Healthy PMIs tally with just about every other U.K. indicator, which point to economic activity above last summer's levels, when restrictions were comparably low," said ING Developed Markets Economist James Smith.
"The biggest danger now comes from the Delta Covid-19 variant, and in particular whether it dampens buoyant confidence levels
The cautious session for Europe comes after a bumper start to the week for global stocks. U.S. stocks were mostly higher on Wednesday after the S&P 500 closed shy of a new record in the previous session, and shares in Asia-Pacific were largely higher by the close.
Market sentiment appeared to be given a boost after dovish comments from Federal Reserve Chairman Jerome Powell at a House of Representatives hearing on Tuesday, reiterating that inflation pressures will be temporary.
In prepared remarks released Monday evening, the central bank chief reiterated that the economy is growing, although the threat of the pandemic is still present.
But bitcoin ultimately recouped its losses Tuesday and was trading back above $34,000 Wednesday afternoon, up 7%.
In terms of individual share price movement, GlaxoSmithKline climbed 1% after the company laid out plans to list its consumer products arm.
At the bottom of the European index, German meal kit delivery company Hellofresh fell 4.9%.
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— CNBC's Ryan Browne and Pippa Stevens contributed reporting to this story.