Europe close: Stocks end month on a down note

European shares finished June on a down note after warnings from central bankers over the preceding days that inflation would be more persistent than originally thought, sparking fears of a recession.

"Equites markets are enduring severe sell offs as worries about global growth mount. Stock markets in Europe are all down over 2% as recession whispers loom over the continent," said David Madden, market analyst at Equiti Capital.

"In recent weeks there has been growing speculation about a downturn in the UK and the eurozone as some economic reports point to a fall in activity."

The pan-European Stoxx 600 index was down 1.5% at 407.20 with all major bourses lower.

France's CAC 40 dropped 1.8% to 12,783.77 as preliminary official figures showed inflation climbed further from the previous month in June to reach a record 6.5%.

Periphery bond yields were under pressure again with the yield on the benchmark 10-year Italian government bond trading nine basis points lower to 3.296%.

On a more positive note, euro area unemployment printed at 5.6% in May (consensus: 5.8%) after falling by one tenth of a percentage point from the month before.

Federal Reserve Chair Jerome Powell on Wednesday said there was “no guarantee” inflation could be tamed without hurting the job market. He added that Russia’s invasion of Ukraine had made it “significantly more challenging” to address high prices.

Bank of England Governor Andrew Bailey and European Central Bank president Christine Lagarde also suggested more aggressive interest rate rises may be needed even as the global economy slows.

Hargreaves Lansdown analyst Susannah Streeter said "a sense of foreboding" was gripping financial markets.

In equity news, shares in German utility Uniper fell 9% after the company withdrew its outlook for the 2022 financial year due to gas supply restrictions from Gazprom.

Virgin Money shares rose 2% as the bank started a £75m share buyback.