Europe close: Stocks end mostly lower after UK CPI data, Fed's Powell

Stocks on the Continent finished Wednesday's session mostly lower as investors as worse than expected inflation data in the UK added to concerns regarding the outlook for interest rates, especially in the near-term.

Earlier, the Office for National Statistics had reported that UK CPI was unchanged in May at 8.7% (consensus: 8.4%), even as core CPI unexpectedly picked up.

The Stoxx 600 ended down by 0.50% to 457.01, alongside a 0.55% decline for the German Dax to 16,023.13, although Italy's FTSE Mib eked out a gain of 0.12% to 27,609.37.

Front-dated Brent crude oil futures were up by 1.15% at $77.05 a barrel on the ICE and euro/dollar was at 1.0964, having gained 0.38% on the day.

"Today’s Powell testimony has been overshadowed by the UK’s strong inflation data, which has reminded investors that central banks generally aren’t done hiking rates," said IG chief market analyst Chris Beauchamp.

"While investors seemed to doubt the Fed’s commitment last week, they are less sure of themselves today, and stocks continue to push lower. For now the market has run out of reasons to rally, and no other catalysts are yet in sight."

In testimony before the U.S. House of Representatives, Powell reiterated that the central bank's focus was squarely on its dual mandate and that "nearly all" the members of the FOMC believed that somewhat higher rates were likely.

Elsewhere on the macro front, overnight a raft of newspapers articles in the state-owned press and former officials called on Beijing to increase its economic stimulus.

In the background, other headlines were focused on alleged Chinese spying activities from Cuba and Beijing's protest after U.S. President Joe Biden dubbed its leader a 'dictator'.