Europe close: Stocks slip despite gains on Wall Street

The pan-European Stoxx 600 index was down 0.23% at 485.63, alongside a 1.15% drop for Spain's Ibex 35 to 9,888.20.

Germany's Dax meanwhile was off by 0.65% to 16,921.96.

Euro/dollar was 0.14% higher to 1.0769.

Dragging on sentiment, German industrial production fell unexpectedly in December, with big falls in output from the key chemical industry.

Industrial production shrank 1.6%, compared with expectations of a 0.4% decline, increasing the risk of a downward revision to fourth-quarter GDP. The figure compared with a 0.2% fall in November. On an annual basis, industrial production was down 3%.

Commenting on the price action in the States, Chris Beauchamp, chief market analyst at IG was telling clients that: "Despite warnings of an imminent correction, US stocks remain in a powerful uptrend.

"Even a more cautious Fed hasn’t derailed Wall Street, and so far the best argument or a pullback appears to be that one is overdue. Perhaps this is true, but such things need a decent catalyst, and at present one refuses to appear.”

In equity news, shares in Barratt fell after it announced its Redrow takeover. Under the terms of the deal Redrow investors will receive 1.44 new Barratt shares for their own stock which would leave them with 32.8% of the combined group and Barratt shareholders with the remainder. Redrow shares gained 15% on the news.

TeamViewer jumped 5% after the German software developer reported higher-than-expected fourth-quarter revenue and earnings.

Sainsbury’s lost ground after saying in a strategy update that it plans to overhaul its supermarkets to focus more on food space as it looks to cut costs by £1bn over the next three years.

Smurfit Kappa added 4% after posting lower full-year earnings and revenue amid a "difficult" demand environment, but said that volumes returned to growth in the fourth quarter.