The Stoxx 600 index fell 0.7 percent on 15th of September, with utilities shares down 2.7 percent to lead the losses as most sectors and major bourses fell into negative territory.
According to the Office for National Statistics, inflation in the United Kingdom reached a nine-year high in August, with consumer prices jumping 3.2 percent year on year after a 2% increase in July. The rise of 1.2 percentage points was the most significant since records began in 1997.
Hugh Gimber, global market analyst at JPMorgan Asset Management, stated, "Following dramatic rises in inflation across the Atlantic in recent months, the UK economy has now arrived to the inflation party."
“The big contribution from restaurant and hotel costs will provide some comfort to the doves on the Bank of England's Monetary Policy Committee, given that much of this was driven by the heavy discounts offered under the Eat Out to Help Out Scheme last summer. However, there are indicators that inflationary pressures are spreading across the economy in a variety of ways.”
Stocks in Asia ended the day mainly negative on Wednesday as data revealed that China's retail sales grew at a considerably slower rate than predicted in August. The month's retail sales increased 2.5 percent, compared to a 7 percent increase predicted by economists polled by Reuters.
The Dow Jones Industrial Average in the United States attempted to recover on Wednesday after a stretch of dismal trading sessions earlier this month.
Inflation in the United States rose less than expected in August, according to Labor Department numbers released Tuesday, raising doubts about the recovery and the timing of the Fed's asset purchases.
In other news, the Institute of International Finance (IIF) reported on Tuesday that global debt surpassed $300 trillion for the first time in the second quarter. However, as economy recovered, debt-to-GDP fell for the first time since the Covid-19 epidemic began.
European investors are also keeping an eye on the impending German federal election on September 26, which polls say is still too close to call as voters try to choose Chancellor Angela Merkel's successor.
In terms of data, Eurostat data released Wednesday showed that euro zone industrial production increased 1.5 percent month over month and 7.7 percent annually in July, compared to predictions of 0.6 percent and 6.3 percent growth.
H&M Group and Inditex, the owner of Zara, reported earnings before the bell.
Just Eat Takeaway's stock dropped 4.6 percent on Wednesday after competitor Deliveroo announced a collaboration with Amazon. Swedish Match surged 4.3 percent at the top of the Stoxx 600 index after announcing plans to spin off its cigar business.