BRUSSELS/FRANKFURT/PARIS (dpa-AFX) - European markets ended mostly higher on Wednesday, although stocks gave up much of their gains towards the end of the session after the European Union said it will launch disciplinary procedures against Italy over its rising debt.
Stocks opened on a firm note and gained in strength earlier in the session amid rising hopes the U.S. Federal Reserve will cut interest rates this year to support economic expansion. Markets were also hoping several central banks across the globe will reduce rates to spur growth.
Investors were digesting a slew of economic data and the World Bank's global growth forecast.
The pan European Stoxx 600 ended 0.38% up. Among the major markets, France ended with solid gains, with its benchmark CAC 40 rising 0.45%. The U.K.'s FTSE and Germany's DAX both edged up by 0.08%.
Among other markets in Europe, Switzerland ended 0.63% up. Greece, Ireland, Netherlands, Norway, Portugal, Spain, Sweden and Ukraine also closed higher.
Austria, Belgium, Czech Republic, Poland and Russia ended flat, while Italy, Finland and Iceland closed weak.
The European Commission's ruling that Italy's growing debt warrants disciplinary proceedings took a toll on Italian bank stocks and dragged the banking sector index by about 2%.
Worldline shares rose harply. French biotech major Deinove and aviation stock Dassault also posted impressive gains.
In the British market, shares of Provident Financial soared more than 16% after Standard Financial Plc decided to withdraw its hostile takeover bid for the British sub-prime lender.
Hangreaves Lansdown had another weak outing and lost nearly 7%, weighed down by concerns over the company's big stake in the Woodford Equity Income fund, which was suspended earlier this week after a run of poor performance and rising redemptions.
World Bank downgraded its global growth outlook citing subdued investment and risks from escalating trade tensions. The major concern is a slowdown in global trade growth to the lowest level since the financial crisis ten years ago and a tumble in business confidence, World Bank noted.
The bank expects growth to ease to 2.6% this year, down from an earlier projection for a 2.9% growth.
Growth is projected to gradually rise to 2.8% by 2021, predicated on continued benign global financing conditions and a modest recovery in emerging market and developing economies.
The euro area private sector expanded more than initially estimated in May, extending the current sequence of growth to just below six years, final data from IHS Markit showed Wednesday.
The composite output index rose to a 3-month high of 51.8 in May from 51.5 in April. The reading was slightly above the flash 51.6.
The final services PMI climbed slightly to 52.9 from 52.8 in April. The flash reading was 52.5.
By country, Germany saw growth improving to a three-month high. At 52.6, the latest composite PMI reading was up from 52.2 in April. The score for May was revised up from 52.4.
Eurozone retail sales fell 0.4% month-on-month in April after staying flat in March. Sales were forecast to remain flat in April.
On a yearly basis, growth in sales eased to 1.5% from 2% in the previous month. This was the weakest expansion in four months. Economists had forecast 2% expansion.
Another report from Eurostat showed that producer price inflation slowed to 2.6% in April from 2.9% in March. Inflation was forecast to rise to 3.1%.
On a monthly basis, producer prices decreased unexpectedly 0.3% in April, following a 0.1% drop in March. Economists had forecast a 0.2% rise.
The UK service sector growth improved more-than-expected to a three-month high in May, but overall private sector activity weakened due to the contractions in manufacturing and construction, survey data from IHS Markit showed Wednesday.
The Chartered Institute of Procurement & Supply Purchasing Managers' Index for services rose to 51.0 in May from 50.4 in April. The reading was also above the forecast of 50.6.
Car sales were down in May in the UK, due largely to uncertainty over diesel and clean air zones and the removal of incentives for plug-in hybrid vehicles, data from the Society of Motor Manufacturers and Traders, or SMMT, showed Wednesday.
Italy's private sector contracted again in May but the pace of decline was slower than that seen in April, survey data from IHS Markit showed Wednesday.
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