Europe close: Stocks inch lower as China optimism fades

Stocks across Europe finished Wednesday's session marginally lower with markets rangebound as optimism surrounding China's latest stimulus package quickly faded.

After a brief stint in positive territory, the Stoxx 600 finished the day down 0.1% at 519.14, with most major indices across the continent closing in the red.

The Stoxx 600 rose more than 1% over the past two trading sessions on the back of a package of stimulus measures from the People's Bank of China aimed at boosting the country’s flagging economy, including cuts to reserve requirements and lending rates, including for existing home loans.

The Chinese central bank added to stimulus on Wednesday by slashing its medium-term lending facility from 2.3% to 2.0%, marking the largest reduction of interest rates for one-year loans to financial institutions in history. It also said it was also lending 300bn yuan ($43bn) to financial institutions.

Patrick Munnelly, partner of market strategy at Tickmill Group, said the brighter Chinese outlook which spurred a global equity rally the previous day ran out of steam "as market observers questioned whether the scope of proposed measures was extensive enough to address deep-rooted issues in China and spark a sustained resurgence in consumer and industrial demand. Even China's central bank reducing its medium-term loan rate on Wednesday did little to lift sentiment again."

There was little in terms of economic data during the session, though a series of GDP growth revisions from the OECD were making headlines. The OECD raised its growth forecast for the UK in 2024 to 1.1% – a significant increase from the 0.4% predicted in May.

Market movers

Finnish paper industry technology maker Valmet led the gainers with a 12% rise after receiving a €1bn order from a pulp mill in Brazil.

Flutter Entertainment surged 7% as the British gambling company announced a $5bn share buyback and said profits were expected to more than double by 2027.

Shares in SAP were down more than 2% on reports that the German enterprise software giant, among others, is being investigated for potential price-fixing on government contracts.

Also in Frankfurt, shares in Volkswagen were lower after unions warned of potential strikes at the carmaker's German factories, as annual pay negotiations got underway.