European stocks ended the trading session on Wednesday with a decline, amid declining expectations for a rate cut after comments by European Central Bank officials indicating monetary tightening, in addition to the impact of pessimistic economic data from China on investor sentiment.
The European STOXX 600 index closed down 1.2 percent, touching its lowest levels in more than six weeks during the session and declining at the largest daily pace since October.
European Central Bank President Christine Lagarde said that the bank is on its way to reducing inflation at the target level of two percent, but that goal has not yet been achieved, while Clash Knut, President of the Dutch Central Bank, said that traders expect to ease monetary policy prematurely.
All major sector indices recorded losses, as the real estate sector, which is highly susceptible to interest rates, declined by 2.8 percent and topped the sector losses, recording the worst percentage decline in one day in more than two months.
While data showed that the growth rate of China's economy was lower than market expectations for the fourth quarter in a row, thus increasing investors' aversion to risk.
The luxury goods sector exposed to China declined, as shares of LVMH, Kering and Richemont fell between 2.4 and 3.5 percent. The automobile sector fell 2 percent.
The basic metals and precious metals sector also fell by 2 percent, affected by the decline in copper and gold prices.
A reading showed that inflation in the euro zone reached 2.9 in December on an annual basis.
