The Stoxx 600 index fell 0.4% at the close.
The benchmark rose briefly earlier in the day after data showed consumer price inflation in the world’s largest economy fell year-on-year in April.
However, a closer look at the report showed that core US inflation was still elevated, hitting 5.5% in April as expected, down slightly from 5.6% in March.
Investors are also closely watching ongoing negotiations to raise the US federal government’s debt ceiling to $31.4 trillion, which entered a new phase on Wednesday as the Treasury Department warned of the inability of the government to honor its obligations, perhaps as early as June.
The index of personal and household goods companies and the food and beverage index were the hardest hit, while stocks of technology and real estate companies were the only gainers.
Shares of Swedish property company SBB fell for the third session in a row, falling 46% overall, amid concerns over the group’s debt and as a senior executive sold shares.
But better-than-expected corporate earnings largely supported equities.
Alcon stock was among the top gainers on the STOXX 600, up 7.4% after the company reported better-than-expected first-quarter results.
Crédit Agricole Bank rose 5% after the second-largest listed French bank’s first-quarter results beat expectations, with trading revenue up.
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