European shares recouped most of their earlier losses to end flat near 4-1/2-year highs on Wednesday, after robust U.S. retail sales data pointed to a continued recovery in the world's biggest economy.
However, Italy's FTSE MIB Index, closed down 1.7 percent, underperforming the market following weaker demand at its first bond auction since Fitch cut the country's credit rating.
Italy sold four different bonds, including three- and 15-year paper.
"For an important auction of longer-dated paper, this does not inspire confidence," Nicholas Spiro, managing director at Spiro Sovereign Strategy said in a research note.
"The political stalemate in Rome is denting sentiment towards Italian debt, albeit in a fairly muted manner. There's still a disconnect between the severity of Italy's political and economic crisis and the continued resilience of its bond market."