Europe close: Stocks, bonds and euro all lower

European shares extended losses on Wednesday, alongside a retreat in euro area government bond yields and for the single currency itself, as the heads of the US Federal Reserve, European Central Bank and Bank of England all sounded a somewhat hawkish note.

"Given the skittish nature of investors right now, [US Fed chairman Jerome] Powell’s comment about controlling inflation requiring ‘some pain’ was bound to cause more investors to hit the sell button. Given the greater robustness of the US economy, it is not surprising to see European markets in the red following these comments while Wall Street holds its small gains for now," said IG chief market analyst Chris Beauchamp.

The pan-European Stoxx 600 index was down 0.67% at 413.42 but well off its session lows.

All major regional bourses were lower with Germany's DAX down 1.73% to 13,003.35.

That was despite German harmonised CPI surprising at 8.2% year-on-year for June, below May's 8.7% print and the 8.8% forecast by economists.

However, data from Spain showed 12-month inflation had risen to 10.2% in June, up from 8.7% in May and surpassing 10% for the first time since April 1985.

Even so, the yield on the benchmark 10-year Italian sovereign bond dropped by 17 basis points to 3.385% while euro/dollar was 0.69% lower to 1.0446.

As an aside, overnight Chinese President, Xi Jinping, was cited as saying that the country's zero Covid policy was the "most economic and efficient" option.

Just Eat Takeaway stock plunged 17% after Berenberg initiated coverage of the online food delivery platform and rated it a "sell".

Shares in H&M gained 2% after the world's second-biggest fashion retailer reported a 33% growth in quarterly profit that beat expectations.

Cruise operator Carnival tumbled 15% after Morgan Stanley slashed its price target on the shares and reiterated its ‘underweight’ rating.