Europe close: Stocks continue to fall ahead of 4 July weekend

Europe's main equity indices finished the day at their session lows despite the release of better than expected economic data on both sides of the Pond and further afield ahead of the long 4 July weekend in the States.

At the closing bell, the benchmark Stoxx 600 was down by 0.34% or 1.29 points to 379.37, with the Cac-40 off 0.65% or 33.67 points to 5,120.68 and the Dax 0.73% or 91.07 points lower to 12,325.12.

Shares in chemicals companies did worst, with the Stoxx 600 sector gauge dropping 1.28% to 901.19, alongside a fall of 1.14% for lenders' shares listed on that same index.

Acting as a backdrop, the yield on the 10-year German bund finished the five-day stretch up by 22 basis points to 0.48% for their biggest weekly gain since December 2015.

In parallel, front month Brent crude futures were up by 1.13% to $47.96 per barrel on the ICE while euro-dollar slipped 0.23% to 1.1415.

Share prices staged a bounce during the first half of the session which some traders attributed to better than expected readings on China's factory sector.

Yet by the afternoon those advances had been erased.

Overnight, the official Chinese manufacturing sector purchasing managers index improved from a reading of 51.2 to 51.7, far surpassing the 51.0 forecast by analysts.

Nonetheless, Julian Evans-Pritchard at Capital Economics was unconvinced by the figures, telling clients they should be taken with a 'pinch of salt' given how they had been diverging recently from more reliable measures which had been pointing to easing momentum in the economy.

Data out of Europe on the other hand was generally upbeat.

French household consumption accelerated sharply in May, jumping by 1.0% month-on-month (consensus: 0.7%) after a gain of 0.4% during the previous month, according to INSEE.

Euro area consumer prices advanced at a 1.2% year-on-year pace in June, up from 1.1% in the month before (consensus: 1.3%) even as core CPI inflation came in at 1.1%, after a reading of 0.9% for May (consensus: 1.0%).

In other key data, joblessness in Germany rose by 7,000 people in June, exceeding forecasts calling for a drop of 10,000, although the rate of unemployment in the euro area's largest economy dropped by a tenth of a percentage point to 5.5% - its lowest level since 1991.

German retail sales meanwhile were 0.5% higher month-on-month in May, ahead of the 0.3% rise foreseen by analysts who said the data hinted at stronger consumer spend in the second quarter.

On the corporate front, shares in Bayer weakened after the company flagged that sales and profits would be lower than expected this year due to stockpiling of crop-protection products in Brazil.

RWE's chief told Frankfurter Allgemeine Zeitung the company was planning an additional €300m of savings by 2020.